As the world descends into a much-heralded recession, the surprise will be that interest rates will continue to rise as economic activity contracts. This is not what the economic establishment expects.
This article puts the outlook in the context of classical economic theory, when it was the principles behind the division of labour which went unchallenged. Adopting the theme of Say’s law, this article permits a forecast with a high degree of certainty that far from a recession leading to lower prices, lower interest rates, and therefore investor heaven, it will lead to higher prices, higher interest rates, budget deficits soaring out of control, and liquidation of the dollar by over-exposed foreign holders.
As evidence mounts that the major Western economies are heading into a banking and monetary crisis due to contracting credit, we face the consequences of unsound money. The era of fiat is drawing to a close and its death will be painful for the highly indebted advanced economies in North America, Europe, and Japan. History and legal precedent tell us that fiat will die and gold will return to provide an anchor to credit system values.
Gold is nature’s money.
Aristotle listed four characteristics of sound money: it must be durable, portable, divisible, and have intrinsic value. Gold possesses all of these characteristics, which is why gold has served as money for thousands of years.
There is a growing consensus that the Federal Reserve can slay price inflation while guiding the economy to a “soft landing.” In fact, Fed economists now project the US economy will not spin into a recession. Other mainstream pundits and prognosticators have taken up this narrative. But there are plenty of reasons to doubt it.
Federal Reserve Chairman Jerome Powell delivered his annual speech at Jackson Hole on Friday. Peter Schiff broke the speech down in his podcast and said the speech itself was full of holes.
It wasn’t so much what he said, but what he left out.
Gold and silver rallied from the lows of last week in quiet Comex trade for gold, but more active trade in silver. In Europe this morning, gold was at $1916, up $27 from last Friday’s close, and silver was up $1.30 at $24.14.
Most people now seem to think the Federal Reserve can beat price inflation and guide the economy to a soft landing. In his podcast, Peter Schiff explains why most people are wrong. The Fed is actually in a no-win situation. And if the Fed can’t win, gold can’t lose.
There is a growing consensus that the Federal Reserve can successfully slay price inflation and bring the economy to a soft landing. After all, the economy appears to be chugging along. But as Friday Gold Wrap host Mike Maharrey explains, there are a lot of things bubbling under the surface that should temper that optimism. In fact, what we’re seeing today looks a lot like 2007.
The Consumer Price Index (CPI) data for July came out last week. Even though the headline number ticked up slightly compared to June, most mainstream analysts took it as a sign that the Federal Reserve made more progress in its inflation fight. In fact, most mainstream pundits seem convinced that the Fed is on the verge of winning that fight and pushing CPI back to its 2% target. In his podcast, Peter said they are wrong.
Credit cards are great until the bill comes due. And the US economy has about maxed out the plastic. The Federal Reserve incentivized borrowing and the economy is buried under trillions of dollars in debt. As Friday Gold Wrap host Mike Maharrey explains in this episode, the bill is about to come due. He also goes over the July CPI data and digs into some of the ramifications.
