A deflationary asset collapse is what they are trying to prevent by creating money to plug the holes in a debt-based financial system that's been over-extended and even more leveraged up the wazoo since the 2008 crisis. All of this hole-plugging with new imaginary money piles more inflationary pressure on top of the high inflation that isn't going away whether they raise interest rates or not. Interest rates at 4% won't beat back inflation that is running over 8% and climbing. We've seen this movie before.
Hyperinflation won't occur until and unless a significant percentage of the people lose total confidence in the system. The way things are being mismanaged now, that could happen at any time as more working people are living paycheck to paycheck while others get free money for doing nothing. Nothing destroys confidence more than this type of policy abuse. I honestly don't know how metals holders would fare in this scenario, except that I tend to think that anyone who holds precious metals has also made contingency plans and has sufficient assets to have diversified to a degree.
@hvellente - you say it’s proselytizing and that you reject any possibility of a nuke war, and yet we’ve had the heads of state in 3 major countries make veiled and not so veiled threats about it in just the past 2 weeks.
Nobody here is rooting for a doom & gloom scenario in ANY way, but it’s pretty naive to ignore any of these scenarios if you want to have a chance at preserving your wealth or health.
So, why isn’t gold up? At this time, I’d have to say that most people have zero idea what to do with their wealth, and that many are too mentally paralyzed to even get from Point A to Point B.
Q: Are You Printing Money? Bernanke: Not Literally
@jmski52 said:
A deflationary asset collapse is what they are trying to prevent by creating money to plug the holes in a debt-based financial system that's been over-extended and even more leveraged up the wazoo since the 2008 crisis. All of this hole-plugging with new imaginary money piles more inflationary pressure on top of the high inflation that isn't going away whether they raise interest rates or not. Interest rates at 4% won't beat back inflation that is running over 8% and climbing. We've seen this movie before.
Hyperinflation won't occur until and unless a significant percentage of the people lose total confidence in the system. The way things are being mismanaged now, that could happen at any time as more working people are living paycheck to paycheck while others get free money for doing nothing. Nothing destroys confidence more than this type of policy abuse.
>
(Hyper) inflation and a deflationary collapse are ultimately psychological. The decision to "print to infinity" is a psychological decision. It's not a mechanical outcome as I constantly see implied in comments on forums like this one.
The US government and FRB (or any of their counterparts) cannot possibly prevent a deflationary collapse if market psychology moves against "them". I use "them" in quotes because there isn't a single person who can prevent it (even under conventional claims) and the individuals who compose these entities - governments and central banks - don't have the same motives and absolutely will disagree under conditions of duress. This is plainly obvious.
The government and FRB are not human beings. So, while one or both may not in theory have anything to lose, many of the individuals who make up these entities do which is why they will disagree with each other and they do, all the time. The reason this didn't happen much between the GFC and the COVID response is that there appeared to be no cost. The decision to borrow at (near) 0% is an easy one without any apparent consequences.
institutionally, the USD is the basis of the FRB's power and so is the currency of every other major central bank. The BOG and district banks aren't going to voluntarily destroy the USD by "printing to infinity" and even if they do, it won't be without a political consensus from other "stakeholders", as it would be ruinous to the careers and reputations of these individuals to do it. I have never seen any acknowledgment of this basic fact even once by those who believe in hyperinflation.
The USD as global reserve currency is also the foundation of the US Imperial State, what I call the Empire. Without it, the US either will or is at risk of losing its leading geopolitical position. US geopolitical power is also the basis of US elite power. The US is currently in the process of throwing this position away for other reasons, but I don't believe these people intend to give it up voluntarily. Those with the most influence won't voluntarily trade geopolitical "hard power" to support financial markets, as trading it for fake paper "wealth" is nonsensical.
In any event, you should get my point. Any belief in imminent or near-term hyperinflation I have read on forums like this one is a very simplistic belief which doesn't remotely reflect reality.
I honestly don't know how metals holders would fare in this scenario, except that I tend to think that anyone who holds precious metals has also made contingency plans and has sufficient assets to have diversified to a degree.
The reason I commented on this aspect is because I have seen no indication in comments here that those who come across as "metal bugs" have considered any alternative outcome to their inflationary view.
The timing of events matters. If a deflationary crash happens first or there is an extended GFC type recession, many if not most of these people are going to be forced sellers. In the GFC, the markets crashed (including gold and silver), unemployment soared where millions lost their jobs, and then many of these people went into foreclosure. Massive fiscal and monetary policy bailed them out but without it, millions or tens of millions would have been financially ruined or had their lives permanently changed.
The reason I commented on this aspect is because I have seen no indication in comments here that those who come across as "metal bugs" have considered any alternative outcome to their inflationary view.
As a metal bug my inflationary views (which do not by the way call for hyperinflation) are not relevant to my stacking. I stack because of the abuse the dollar takes from its handlers and the effect the abuse will have on public faith in the CB and the currency. Inflation is simply a current byproduct of this abuse.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
The reason I commented on this aspect is because I have seen no indication in comments here that those who come across as "metal bugs" have considered any alternative outcome to their inflationary view.
As a metal bug my inflationary views (which do not by the way call for hyperinflation) are not relevant to my stacking. I stack because of the abuse the dollar takes from its handlers and the effect the abuse will have on public faith in the CB and the currency. Inflation is simply a current byproduct of this abuse.
As long as gold continues its normally inverse relationship with the US Dollar Index (DXY), PM prices will remain and likely become more depressed. Currencies in the "basket" that determines DXY ranking (currently at the top of the heap of the stinking pile) continue to suffer and are worsening thanks in great part to devastating US Federal Reserve bank policy that has been exported to foreign soil. In particular, the Euro (a whopping 57.6% of the basket) is taking a beating while Germany is being forced to look closer at a better relationship with it's nearby sanctioned and sabotaged piping energy supplier. As Germany by far is at the lead of the Eurozone, this alone could result in deterioration and eventual breakup of the EU itself leaving the future of the euro and the "basket" in question.
The gold/DXY relationship black swan waiting in the wings as the DXY declares superiority over the other five currencies in the basket (Japanese Yen, British Pound, Swiss Franc, Euro and Swedish Krona) is a break from the normal inverse relationship with the DXY that sees both gold and DXY prices rise in tandom. This can only occur if investor perception that currently says "dollar is high, therefore gold has to be low" wakes up and realizes that a high dollar index is not indicative of a strong dollar at home. Inflation is quickly telling us the opposite is in fact true. DXY only tells us the dollar is the prettiest pig in the world-wide beauty contest. A person who has fifty cents is rich only if everyone else has a dime.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
The gold/DXY relationship black swan waiting in the wings as the DXY declares superiority over the other five currencies in the basket (Japanese Yen, British Pound, Swiss Franc, Euro and Swedish Krona) is a break from the normal inverse relationship with the DXY that sees both gold and DXY prices rise in tandom. This can only occur if investor perception that currently says "dollar is high, therefore gold has to be low" wakes up and realizes that a high dollar index is not indicative of a strong dollar at home. Inflation is quickly telling us the opposite is in fact true. DXY only tells us the dollar is the prettiest pig in the world-wide beauty contest. A person who has fifty cents is rich only if everyone else has a dime.
No, the USD isn't strong.
Concurrently, gold isn't remotely "cheap" either. It isn't cheap relative to many of the physical goods people want and need to buy, though measuring it isn't an exact science.
For example, gold is not cheap versus homes or cars even as housing is in its own bubble in many markets.
"Meanwhile, the triggers for an inevitable pivot continue to pile up in bond markets, the stock market, the banking sector, emerging markets, and so on and on. All it takes is one snowflake for the avalanche to begin, and there are so many potential snowflakes!"
"In the meantime, if something breaks in the markets that causes the Fed to just reduce its next rate hike to 50bp, the bottom is in, imho."
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Comments
A deflationary asset collapse is what they are trying to prevent by creating money to plug the holes in a debt-based financial system that's been over-extended and even more leveraged up the wazoo since the 2008 crisis. All of this hole-plugging with new imaginary money piles more inflationary pressure on top of the high inflation that isn't going away whether they raise interest rates or not. Interest rates at 4% won't beat back inflation that is running over 8% and climbing. We've seen this movie before.
Hyperinflation won't occur until and unless a significant percentage of the people lose total confidence in the system. The way things are being mismanaged now, that could happen at any time as more working people are living paycheck to paycheck while others get free money for doing nothing. Nothing destroys confidence more than this type of policy abuse. I honestly don't know how metals holders would fare in this scenario, except that I tend to think that anyone who holds precious metals has also made contingency plans and has sufficient assets to have diversified to a degree.
@hvellente - you say it’s proselytizing and that you reject any possibility of a nuke war, and yet we’ve had the heads of state in 3 major countries make veiled and not so veiled threats about it in just the past 2 weeks.
Nobody here is rooting for a doom & gloom scenario in ANY way, but it’s pretty naive to ignore any of these scenarios if you want to have a chance at preserving your wealth or health.
So, why isn’t gold up? At this time, I’d have to say that most people have zero idea what to do with their wealth, and that many are too mentally paralyzed to even get from Point A to Point B.
I knew it would happen.
>
(Hyper) inflation and a deflationary collapse are ultimately psychological. The decision to "print to infinity" is a psychological decision. It's not a mechanical outcome as I constantly see implied in comments on forums like this one.
The US government and FRB (or any of their counterparts) cannot possibly prevent a deflationary collapse if market psychology moves against "them". I use "them" in quotes because there isn't a single person who can prevent it (even under conventional claims) and the individuals who compose these entities - governments and central banks - don't have the same motives and absolutely will disagree under conditions of duress. This is plainly obvious.
The government and FRB are not human beings. So, while one or both may not in theory have anything to lose, many of the individuals who make up these entities do which is why they will disagree with each other and they do, all the time. The reason this didn't happen much between the GFC and the COVID response is that there appeared to be no cost. The decision to borrow at (near) 0% is an easy one without any apparent consequences.
institutionally, the USD is the basis of the FRB's power and so is the currency of every other major central bank. The BOG and district banks aren't going to voluntarily destroy the USD by "printing to infinity" and even if they do, it won't be without a political consensus from other "stakeholders", as it would be ruinous to the careers and reputations of these individuals to do it. I have never seen any acknowledgment of this basic fact even once by those who believe in hyperinflation.
The USD as global reserve currency is also the foundation of the US Imperial State, what I call the Empire. Without it, the US either will or is at risk of losing its leading geopolitical position. US geopolitical power is also the basis of US elite power. The US is currently in the process of throwing this position away for other reasons, but I don't believe these people intend to give it up voluntarily. Those with the most influence won't voluntarily trade geopolitical "hard power" to support financial markets, as trading it for fake paper "wealth" is nonsensical.
In any event, you should get my point. Any belief in imminent or near-term hyperinflation I have read on forums like this one is a very simplistic belief which doesn't remotely reflect reality.
I honestly don't know how metals holders would fare in this scenario, except that I tend to think that anyone who holds precious metals has also made contingency plans and has sufficient assets to have diversified to a degree.
The reason I commented on this aspect is because I have seen no indication in comments here that those who come across as "metal bugs" have considered any alternative outcome to their inflationary view.
The timing of events matters. If a deflationary crash happens first or there is an extended GFC type recession, many if not most of these people are going to be forced sellers. In the GFC, the markets crashed (including gold and silver), unemployment soared where millions lost their jobs, and then many of these people went into foreclosure. Massive fiscal and monetary policy bailed them out but without it, millions or tens of millions would have been financially ruined or had their lives permanently changed.
As a metal bug my inflationary views (which do not by the way call for hyperinflation) are not relevant to my stacking. I stack because of the abuse the dollar takes from its handlers and the effect the abuse will have on public faith in the CB and the currency. Inflation is simply a current byproduct of this abuse.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Fair point
As long as gold continues its normally inverse relationship with the US Dollar Index (DXY), PM prices will remain and likely become more depressed. Currencies in the "basket" that determines DXY ranking (currently at the top of the heap of the stinking pile) continue to suffer and are worsening thanks in great part to devastating US Federal Reserve bank policy that has been exported to foreign soil. In particular, the Euro (a whopping 57.6% of the basket) is taking a beating while Germany is being forced to look closer at a better relationship with it's nearby sanctioned and sabotaged piping energy supplier. As Germany by far is at the lead of the Eurozone, this alone could result in deterioration and eventual breakup of the EU itself leaving the future of the euro and the "basket" in question.
The gold/DXY relationship black swan waiting in the wings as the DXY declares superiority over the other five currencies in the basket (Japanese Yen, British Pound, Swiss Franc, Euro and Swedish Krona) is a break from the normal inverse relationship with the DXY that sees both gold and DXY prices rise in tandom. This can only occur if investor perception that currently says "dollar is high, therefore gold has to be low" wakes up and realizes that a high dollar index is not indicative of a strong dollar at home. Inflation is quickly telling us the opposite is in fact true. DXY only tells us the dollar is the prettiest pig in the world-wide beauty contest. A person who has fifty cents is rich only if everyone else has a dime.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
No, the USD isn't strong.
Concurrently, gold isn't remotely "cheap" either. It isn't cheap relative to many of the physical goods people want and need to buy, though measuring it isn't an exact science.
For example, gold is not cheap versus homes or cars even as housing is in its own bubble in many markets.
I've managed my position in UUP since Feb. and I like it.
FED keeps Gold and Silver in limbo.
"Meanwhile, the triggers for an inevitable pivot continue to pile up in bond markets, the stock market, the banking sector, emerging markets, and so on and on. All it takes is one snowflake for the avalanche to begin, and there are so many potential snowflakes!"
"In the meantime, if something breaks in the markets that causes the Fed to just reduce its next rate hike to 50bp, the bottom is in, imho."
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong