On August 15, 1971, then President Nixon calmly announced that Treasury Secretary had been directed to “suspend temporarily the convertibility of the dollar into gold”. Further he stated “Let me lay to rest the bugaboo of what is called devaluation.” After all “If you want to buy a foreign car of take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today.” He reassured the American pubic that “The effect of this action, in other words, will be to stabilize the dollar.” And so the public did not understand that everything had changed as the full control of inflation was handed over to the central bank.
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Since then, wealth and income inequality has expanded to historic levels. With global unrest expanding, it appears that we are at a breaking point. With interest rates anchored at zero and debt levels exploding upward, the monetary regime shift was announced last Thursday.
As complicated as all this seems, it is really as simple as this. There is only one way to fight deflation and that is with inflation. But, through the second quarter, GDP (Gross Domestic Product), which is all the money that flows through the economy, is expected to plummet by 31.7%. Worse than the Great Depression between 1929 – 1933.
Can you see that a 31.7% decline in GDP isn’t just deflation, but HYPER-deflation? And the only way to fight HYPER-deflation is with HYPER-inflation. Therefore, the money bazookas were brought out in March, dwarfing the money bazookas in 2008. And while the stock market went up like a rocket ship, the real economy continues to contract.
The game has now moved into an extremely dangerous part. The Fed WILL get their inflation, regardless of the cost. This is why you need physical gold and silver, real money that has been real money for thousands of years.
We have already begun to move through a global reset, financially, economically and socially. How you walk through this is up to you. But since history repeats itself, I’m going with gold and silver in my possession, because we also know that if you don’t hold it, you don’t own it.
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Chief Market Analyst, ITM Trading