GOLD, INSTABILITY AND THE FED

 

The most destabilizing economic force is inflation.  As inflation carreens out of control the only monitary beneficiary is gold.

The last US president to seriously fight inflation was Carter with his Fed Head Volker.  They broke the back of inflation with 20 percent rates, brought on and suffered a terrible recession though they knew it would be politically disasterous, and enabled 50 years of unchecked negative real rates that sparked a 50 year market bubble that is just now blowing off.

Taking rates from %20 to %0 with a backdrop of globalization to suck up inflationary results was a once in a century run - or perhaps a unique historical run.

That's over.

Globalization has given way to a new age of Super Power Imperialism.

And 50 years of negative real rates has brought about an economy that moved from a creditor economy to one of the world's largest debtor economies.

Now inflation is permanently out of control - remember the Inflation rate is only a measure of how much more inflation is increasing.  Even at 2 percent (which may never again be reached) prices are still careening out of control - just at a slower - 2 percent - rate.

The US government is living with 2-3 trillion dollar yearly deficits with long rates permanently backing up - in spite of a Fed that is officially easing. 

So what is the FED to do?

The conventional wisdom is that they can't keep cutting in this circumstance (sticky inflation, rising rates and near full employment).  The market is acting now as though this is obvious.

HOWEVER - the FED - (like the SUPREME COURT - and like CONGRESS) - though supposedly independent and co-equal to the President - is actually a wholly ownded subsidiary of the US Billionaire class that controls the US presidency.

The only question is this: CUI BONO?

In other words: WHAT WILL BENEFIT THE BILLIONAIRE CLASS?

the answer is this: LOWER RATES no matter what is happening in the broad economy.  Because the narrow economy - the Hard Asset owning class - the Blllionaire class - makes money as liquidity rises.  And liquidity only rises as the real cost of money remains substantially lower than the rate of inflation.

So the Fed will be forced to cut.  And if they resisit, the members will be replaced - whether the law allows for this or not.  Because the LAW is also a wholly owned subsidiary of the Billionaire class.  

If you don't beleive it just look at the felons and rapists and tax cheats and violent insurectionistts that fill the top posts in the government.  If they are in the Billionaire class or endorsed by the Billionaire class nothing else matters.

Learn it.  Love it.  Live it,  Invest accordingly.