The Pivot already happened: we're there.

 

While everyone is waiting for confirmation that the Fed will pivot and debating wether the next move should be up or down and what is really going on with inflation blah blah blah...

The pivot already happened.

The Fed got rates as high as they possibly could - but not to crush inflation.  The Fed rate policy just tamps down on Bank Lending.  The Fed got rates as high as they could so that they have some nominal amunition to use during the next crisis.  To make everyone think they're still in control.

But the crisis is here.  The debt levels are so out of control in the government,  corporate and household sectors, that debt service is nearly impossible at the current rates.  Look up the stats for yoursself.

The Fed knows this.  They can't say it.  It would cause a panic.  They have to say everything's fine, nothing to see here, just keep spending...

But they're not idiots.  They understand the debt levels as well as anyone.  The problem is there's nothing they can do about it but try to slowly get real rates more and more negative so that the debt can be slowly inflated away.

That's the best possible outcome.

But it's tough.

Because the political class has every incentive to try to make the GDP figures as high as possible.  And the only way they can do that is to print money off the books and funnel to the asset owning classes so that they can spend.

Right now Biden has already prepared a trillion dollars to funnel through the FHA in the form of cheap home laons to those who would never qualify for a bank loan so they can spend going into the october election.  Where does that money come from?  We print it.  The Treasury/Fed/Executive branch has a lot of leeway in hoow they can print and funnel money into the economy - off balance sheet.

If Biden is reeclected he'll keep doing it.

If Trump is elected he'll keep doing it.

And Trump is also already preparing massive spending programs in the form of dollar devaluations, tax cuts for the largest corporations, and new laws that will support exports while making imports much more expensive for the American consumer. All higly inflationary.

Both candidates are preparing massively inflationary policies.  

Because the if you undercount inflation - which the government systematcally does, the inflation shows up as a massively overestimated GDP.

That doesn't change anything for the debt strapped, cash strapped US consumer.  But it it's great for talking points and it makes the rich ever richer.  Becasue Asset inflation is part of overall inflation.

Why do we do this?

That's all our political/economic system is equipped to do.

This is not radical thought.  This is stuff everyone knows.  This is why the Billionaire class from Ackman to Dalio, to Einhorn to Paulsen to Rogers to Zulauf to Rothschild to Druckenmiller to most Chinese and Indian billionaires are all piling into gold.  These are  not "gold bugs."  If I included gold bugs like Schiff etc the list would go on for ever.

This is also why China, India, Russia, Saudi Arabia, and many others are purchasing massive amounts of gold though their central banks,

Not to fight inflation.   But as a hedge against the instability that is sure to flow from the massive inflation.

We're there.

It won't look like a straight investing line.  It never does.

But we're there.

And it will go on until the central banks of the world decide the system is no longer working for any but the top 10 percent - and eventually the top 5 percent, and then eventually the top 1 percent - which is not populous enough to fight off the resentment of everyone else for whom the system no longer works.

Then something will change.  Who know what.  And who knows what to invest in for that system.

But that's a ways off.

Meanwhile buy gold