Fiscal Policy IGNORANCE: Why Higher Interest Rates Might Lead To Declining Gold and Silver Price and a huge buying opportunity later – December 15, 2021,
We’re in a very interesting period in history, namely that shortages are being normalized, people all over Western Nations are loving the idea of being locked down, which from an economic perspective equates to a lack of productivity, Politicians fudge the numbers when they ignore people not returning to the workforce.
Historic job growth is what the politicians all proclaim when it’s quite clear that this is far from the truth. I personally live in an area of a major city that typically experiences a lot of traffic especially during rush hour, to put this in perspective, they’re currently doing construction near my home and the car traffic still isn’t as bad as it was in 2018-2019 when there was construction, where I live is near a highway and there is even construction is happening in the alternate routes.
The bus stops look empty, the roads don’t have as many people as they used to, maybe I’m 100% wrong, maybe when I go out during rush hour I’m seeing what I want to see, but I do remember the last time gas prices went up, the behavior of the working person changed. Of course, they’ll always be spendthrift money morons, but the rest of us live within our means and the regulatory environment appears dire for the working person who sees their wages coming up in a minuscule amount to the cost of living.
Humans might be ignorant regarding the indebtedness of the government and how it relates to their standard of living, but they do know how to survive. If you’ve visited poor nations, the poor will find a way to survive, humans aren’t going to roll over and die, because the economy is declining. Printing money can’t hide shortages of stuff.
Allow me to elaborate on shortages of stuff, shortages of stuff also include shortages of labor, now because of government regulations, in my country of Canada, and my city of Toronto it could take months or even years before a person becomes a TAXI driver. Regulations equate to what could be a skill learned on the job, into a skill that requires hours of training in a regulated institution.
The politicians in power, want people to imagine that when some skilled laborer decides not to get vaccinated that they’re easily replaceable? Politicians are even imagining that labour is easily replaceable in areas of the economy in which labor was scarce pre-pandemic? So what does this ultimately mean? It means that inflation is inevitable, but here’s what people are ignoring the economy is going to DEFLATE!
Economic Deflation is bad for Gold Prices, Money Printing is great for Gold when the following happens…
Economic deflation isn’t good for Gold and Silver prices, early in the deflationary economic cycle, because the assumption by most traders is that the Central banks are going to raise interest rates. Why leave my money in Gold and Silver now when it’s going to go on discount when people are forced to liquidate during a deflationary cycle?
Higher interest rates are a deflationary cycle, now, of course, being ignored in all of this is fiscal policy because, well, Politicians are idiots and who knows what scheme they’ll come up with, once they realize higher interest rates aren’t stopping consumer price inflation? Maybe they’ll institute price controls, maybe a new regulation on financial institutions, the ideas politicians have at their disposal are endless.
If you’re unaware because most people aren’t aware-economic deflation under a fiat monetary system equates to consumer price INFLATION that’s always been the central banks mandate good times and bad. Central banks hide deflation by printing money/making the markets more liquid for borrowers. This leads to anger, you must also factor in anger, when people are spending more to buy less, they’re going to get angry, this might be a wave of violent anger or something different, but it will signal changes in the marketplace. The problem of course comes when it becomes abundantly clear to THE PEOPLE that fixing this problem won’t be easy.
Of course, the answer is easy, normalize interest rates and let the too big to fail, fail? But no human wants change that requires hard work, humans look to politicians for easy answers and once this blood in the streets event happens, meaning rampant inflation and SHORTAGES, I expect this is when the price of Gold and Silver will rise because it will be a signal that the fiat monetary system is coming to an end.
The price for things in Gold and Silver and even copper is relatively the same as it’s always been, but you have to remember that there’s a shortage in Gold and Silver and if let’s imagine for a moment that the new money system even if it’s temporary has to be backed by Gold and Silver, it’s a signal of austerity measures.
Nobody wants austerity measures, because then politicians can’t lie anymore, during austerity measures people start asking questions, doing research, and educating themselves about money and financial education, which I like to point out is nothing more than a convenient form of bartering. As we all know, the point of central banks and Keynesian economics is to create magic tricks with money. But obviously, this leads to malinvestment and malinvestment is the real problem.
Most of the malinvestment is coming from the government, sure the private sectors are also misallocating resources, but they’re doing that because of price and regulatory signals coming from CENTRAL COMMAND. So I expect Gold and Silver prices to come down sharply especially once central banks start raising rates, which is inevitable at this point because there are shortages and of course the problem can’t be government regulations on the economy? Nooo, the problem is those evil Trump supporters, Trump caused this, the government in power is innocent of all charges and should keep spending because the poor need the money…
Do you see where I’m going with this? How long can that charade go on? Maybe years, who knows, but because of SHORTAGES of both labour and stuff, it’s going to eventually become evident that the government has lost control of the situation and this my friends is when I expect the prices of Gold and Silver and potentially other commodities to skyrocket!
Interesting times ahead!