Economic Deflation and Why I Expect The Price of Gold To Fall: Record Debt, Inflated Fiat Prices and The United States housing crisis – June 17, 2021,
Now, to quickly write about the price of Bitcoin, it’s a wild card, I really enjoy watching the price of Bitcoin, because it appears to be reflective of what people expect from the President of the United States as well U.S Federal Reserve. As I’ve stated in prior posts, in my opinion, the cryptocurrencies, led by Bitcoin have no value without Fiat money.
Cryptocurrencies really took off, when the expectation was that the Central banks are going to print money into oblivion. The problem is that this is not what’s happening. The central banks are merely providing liquidity to the markets in the form of debt.
Former President Donald Trump, love him or hate him, was the first President to really give this UBI thing a try and it’s been an utter failure and a lot of Republicans are attempting to claim credit for all the good things in the economy, when really they probably shouldn’t.
Democrats and Leftists, in general, have historically not understood how money works and it’s my belief that the Left genuinely believes that they can spend, regulate, tax, and borrow without consequence. Unfortunately, regardless of what money is backed by, if the system in place requires the private sector to redistribute money via the commercial banks, most retail banks will LEND within the guidelines of the law.
Because most banks are following the law, it’s forcing the governments of the world to borrow money and send checks to people(UBI) in order to stimulate the economy. This is actually deflationary because the money governments send to people is borrowed money often back by nothing but future LABOUR that will find their labor debased by the legal tender they’re forced to transact in.
Now, this to most people, points to Gold shooting to the moon, because after all the government is printing money right? Well, not so fast, the Government is actually borrowing money and because the central banks are not only allowing governments to borrow money they’d never get in the free market, these same governments in their infinite wisdom are also increasing their own costs by adding on me regulations to the private sector as well as raising taxes on the private sector.
Again I like to remind the reader, that there is a COST OF DOING BUSINESS even for the government. In America as an example, because people are being rewarded by Joe Biden for doing nothing, a lot of Americans aren’t going to work.
What people have to also remember is that the rich get richer because of how they choose to spend the money they have. A fool and their money is one big party when Donald Trump rewarded Americans for doing nothing just because people found themselves flush with cash they didn’t deserve, doesn’t mean that they all of sudden turned into Warren Buffet, no if you were bad with money before the pandemic, you might be even worse with money now.
Giving people free things typically exacerbates their problems, making matters worse is the real estate market, which was artificially high prior to the pandemic, now for people who don’t get it, lower central bank interest rates lead to DISTORTIONS in the rental markets Most people rent, and most speculators BORROW to invest.
Most of the people I know who made money with Bitcoin as an example BORROWED money to buy Bitcoin, the same is true with GOLD. a lot of the people I know borrow money to buy Gold. When it comes to borrowing money to purchase an asset, Real Estate lures in the most suckers
I think the normalization of interest rates is unlikely in 2021 but…
What really annoys me is when professionals say that the economy is inflating if the economy is inflating governments don’t have to intervene, governments and central banks intervene when the economy is DEFLATING In order to fight DEFLATION the Venezuelan government devalues its currency.
When the Roman economy is deflating, the Roman equivalent central bankers took the gold content out of the currency. That’s how this works when good money gets chased out by bad money, what happens as an example is everyone is left spending, borrowing, or even creating FAKE MONEY!.
There’s only debt in the system, I don’t understand why people can’t see this. What’s actually been happening in the United States is that the banks don’t want to give their customers any cash, why? Because most banks don’t have enough of it!
a financial institution and particular individuals sometimes have to ORDER cash, there are not trillions of PHYSICAL dollars floating around, it’s mostly digital dollars. Also, inflated asset prices are the result of the central bankS, trillions of dollars can disappear overnight with a rate hike or stock market or crypto market crash, what can’t disappear from the government’s perspective are their obligations to pay unearned benefits in the future.
The only game in town is the game I’ve been writing about for years and it’s when will the U.S government default on its debt obligations? Now austerity measures or defaulting on debt could come in many shapes and forms, it’s unlikely the U.S will default on debts to its creditors, what seems more likely if the government defaults is that it will cut social security and cut back on any pension obligations.
Now, most retail banks remember the march on Wall Street, because the Obama administration because of the recklessness of the Bush administration, was able to blame the last market crash on Wall Street and the Banks, well this time, it appears more retail banks have learned their lessons.
The banks have even allowed debt deferrals, which are derived from the Government, Now, sure the government can keep on bailing out the private sector with money it borrows from the federal reserve, but those dollars are already buying less in America.
Now, with that said, the markets are still reluctant to dump the U.S dollar, why? Because the only other way to reprice things is in GOLD. Bitcoin is a derivative of Fiat money, it has no intrinsic value Gold on other hand does have intrinsic value, but no government wants to adhere to a Gold Standard, that’s austerity measures to the extreme in this global welfare State economy and when people have to actually pay for their government with honest money, that has riots written all over it.
So, what I’ve been saying is Gold is about to go on sale, all the people who borrowed to buy gold in the past, are going to be forced to sell once fiat prices start rising. Now, for the record it’s not only people who borrowed money to buy gold, there are countries, and let’s call them legal entities which are about to have some serious U.S dollar-denominated cashflow problems.
The U.S consumer fuels the global economy and that consumer is getting poorer every day, but do not confuse the U.S domestic economy with the DECENTRALIZED forex markets. If you don’t live in the United States you don’t have to pretend to care what Joe Biden does to it!
The Deflationary climax That will push golds price higher!
The Gold price rallies when a politician, attempts to change the role of the Federal Reserve bank. Once this deflationary death spiral begins, the politicians and the central bankers are going to look for something to blame, I can’t predict how that will unfold, I’m not psychic, they could make up all sorts of stories, but the problem with the Central banks and Joe Biden or whoever is President when this happens is that they can’t be honest and tell government dependents that the government will have to default on debts and obligations because the government’s role is not to take care of people.
Instead, they’re going to blame someone or something and once the markets comprehend that a new financial system is being created the price of gold is going to skyrocket, the dollar will drop like a stone, hyperinflation will take shape and this is when I suspect that interest rates will shoot up!
When all of this happens, by the way, don’t think the politicians will abandon their plan to change the financial system, this is why when the next gold buying opportunity comes, you may want to consider taking it because it will be a situation in which you’re only going to want to spend portions of your gold, not all of it while this transition is taking place.
In history, there are extended periods of time in which governments struggle to create a stable currency. You have to understand that during a market interest rate environment, only the financially educated know how to play the game correctly.
There are a lot of people in the real estate markets as an example that shouldn’t be there, normalized interest rates will get rid of these idiots. Normalized interest rates get a lot of people who should be in the markets out of the markets. Because real risk will return to the market and most people can’t stomach the risk of losing money.
Now, just being honest, because of the deflationary effect technology has had on the global economy, this is still a quick fix, the problem is, of course, we have a democracy
the good news is that more people are smarter now, so as I like to point out, I don’t price my wealth in fiat dollars, my wealth is priced in knowledge. Knowledge is power and if you’ve become accustomed to taking ‘risks’, politicians in the future are going to become more and more comical and potentially dangerous to you, which is why I suspect, new countries might be formed in the future.
How do you avoid the stupidity of big government you ask? In mental preparation, must big government-loving humans like easy answers and don’t want to enjoy the ride of the markets, don’t assume that just because a person claims to be a conservative that they know what’s going on.
Donald Trump and his big-government corporatist ideology is beginning to take over the republican party, if reelected, don’t be surprised if Trump fights for lower interest rates or even works to change the financial system.
A big government is ALWAYS a bad idea, no matter who is in charge. Sure Joe Biden is as dumb as dumb gets, but let’s not forget that the Plunge Protection team came from Ronald Reagan and taking America off the gold standard came from Richard Nixon and a Federal UBI in the forms of free checks was first tried by Donald Trump
Interesting times ahead!