The currency in circulation is what is called "high-powered money" and is the fuel for credit creation. That increase in HPM led to the boost in the monetary aggregates, notably M1, M2, and M3. HPM boosts lead to increased M1...more of a boost to M2....and usually more M3.
The fuel for credit creation is debt. Also known as Fractional Banking it allows banks to loan out 90% of their deposits which in turn creates "new" money.
Lest we forget that largest portion of currency in circulation was printed out of thin air since 2008 under the guise of "quantative easing (QE)," which is a more palatable term for "currency debasement."
Modern Monetary Theory (MMT) or the Magic Money Tree illustrated:
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
@GoldFinger1969 commented: The currency in circulation is what is called "high-powered money" and is the fuel for credit creation. That increase in HPM led to the boost in the monetary aggregates, notably M1, M2, and M3. HPM boosts lead to increased M1...more of a boost to M2....and usually more M3.
The big boost was necessary to counter the drop in velocity.
Milton Friedman, Quantity Theory of Money: MV = PQ "
Especially regarding "the big boost was necessary to counter the drop in velocity", it is an interesting point to ponder. But, I wonder if the cause and effect (loosely using this term) is in the opposite direction? That is, most of the money recently created has gone into the hands of people who don't need to spend it; they don't spend it, and this results in a drop in velocity. (during part of the COVID era, much of the new money was being spent, and this accounts for the significant uptick in inflation for some period)
The case has been made. The metal of Kings painting new all-time highs while the gutter is stuck in the gutter half what it was 40+ years ago. NORTH! THKS!!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
@blitzdude said:
The case has been made. The metal of Kings painting new all-time highs while the gutter is stuck in the gutter half what it was 40+ years ago. NORTH! THKS!!
And that's what makes silver the play of the decade. Keep buying that gold at all time highs. LOL
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
@blitzdude said:
The case has been made. The metal of Kings painting new all-time highs while the gutter is stuck in the gutter half what it was 40+ years ago. NORTH! THKS!!
And that's what makes silver the play of the decade. Keep buying that gold at all time highs. LOL
Platinum is only 45% of its 2008 high, with perhaps a very interesting chart pattern.
@blitzdude said:
The case has been made. The metal of Kings painting new all-time highs while the gutter is stuck in the gutter half what it was 40+ years ago. NORTH! THKS!!
And that's what makes silver the play of the decade. Keep buying that gold at all time highs. LOL
Platinum is only 45% of its 2008 high, with perhaps a very interesting chart pattern.
Don't know much about chart patterns.... but if ICE vehicle production starts picking up next year, the platinum may have some increases. Might be desirable to get ahead of that curve.
@cohodk said:
Platinum is only 45% of its 2008 high, with perhaps a very interesting chart pattern.
Long-term fundamentals there in doubt given ICE and BEVs.
History is strewn with examples of worthless items trading for obscene prices. In fact, today's society has placed a trillion dollar value on something no one has even seen.
@blitzdude said:
The case has been made. The metal of Kings painting new all-time highs while the gutter is stuck in the gutter half what it was 40+ years ago. NORTH! THKS!!
I don't agree because I think that all time high was the product of massive manipulation. That four year period where silver was above $30 (as high as $48) was followed by ten years of silver being in the teens and twenties. I think the low to mid twenties represents the legitimate range of all time highs for silver and this $30 range does represent the legitimate new all time high.
The longer I live the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice is it possible for an empire to rise without His aid? Benjamin Franklin
@blitzdude said:
The case has been made. The metal of Kings painting new all-time highs while the gutter is stuck in the gutter half what it was 40+ years ago. NORTH! THKS!!
I don't agree because I think that all time high was the product of massive manipulation. That four year period where silver was above $30 (as high as $48) was followed by ten years of silver being in the teens and twenties. I think the low to mid twenties represents the legitimate range of all time highs for silver and this $30 range does represent the legitimate new all time high.
Yes, the all time high was likely due to massive electron/paper manipulations. Just like back in the Hunt era. Very hard for the average person to be able to tell what true price discovery level is, and whether price is at a good buying... or selling.... level.
And quite a few view silver and gold for the insurance aspect.... keeping a diverse basket of investments, and not expecting to 'play' the market buying and selling to try to time a profit.
@blitzdude said:
The case has been made. The metal of Kings painting new all-time highs while the gutter is stuck in the gutter half what it was 40+ years ago. NORTH! THKS!!
I don't agree because I think that all time high was the product of massive manipulation. That four year period where silver was above $30 (as high as $48) was followed by ten years of silver being in the teens and twenties. I think the low to mid twenties represents the legitimate range of all time highs for silver and this $30 range does represent the legitimate new all time high.
It is up now because of market fundamentals, something that was missing the last two decades. While gold has always told us the price of a dollar (in fractions of an ounce), silver is beginning to do the same. Both serve a role as industrial metals yet silver, like gold, is once again (as it was pre 1965) becoming a monetary metal. In the face of dollar destruction by central bank policy and unbridled sovereign spending, this return as a monetary metal is what will drive silver up more than anything.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
@pmh1nic said:
I don't agree because I think that all time high was the product of massive manipulation. That four year period >where silver was above $30 (as high as $48) was followed by ten years of silver being in the teens and twenties. I >think the low to mid twenties represents the legitimate range of all time highs for silver and this $30 range does >represent the legitimate new all time high.
Should silver ever decisively break above $50 an ounce, it will be seen as breaking a previous double-top set in 1980 (Hunt Brothers) and then 2011. I suspect that would gather lots of attention and be very bullish.
One (presumably) obvious point is that there are a vast number of steps between step 3 (the Federal Reserve Note) and step 4 (the Bank of Zimbabwe).
A related observation: the British debt to GDP situation in 1945 was worse than ours is now. Though the pound has lost a lot of value since then, it is still a viable currency and Britain is a stable, prosperous place.
@Higashiyama said:
One (presumably) obvious point is that there are a vast number of steps between step 3 (the Federal Reserve Note) >and step 4 (the Bank of Zimbabwe).
A related observation: the British debt to GDP situation in 1945 was worse than ours is now. Though the pound >has lost a lot of value since then, it is still a viable currency and Britain is a stable, prosperous place.
Excellent points.
I've managed large sums of money and I can tell you that wealthy individuals, SWFs, CBs, and institutions are NOT putting money into illiquid markets where the rule of law and private property rights are NOT protected by checks-and-balances.
NOBODY is entrusting their $$$ or Euros or Francs with Putin or the Chinese Communist Party.
This entire AI revolution is dominated by the U.S. and our companies. Do you know what an extra 1% real GDP growth does over 20 years to your fiscal position ? Like adding 5% to your average annual return from investments and seeing the difference 20 years later.
I have to see the latest SIFMA trading volumes but the U.S. Treasury and MBS markets trade about $850-$900 billion a year with the next highest liquid market being either U.S. Corporates (~$30 BB a day) or British Gilts ($25 BB daily).
Now....if you need to invest $10 BB without moving the market, where the hell can you go ?
Mark Mobius, the Indiana Jones of emerging markets investments, was on TV yesterday and mentioned he was bullish on gold and that Indians loved gold.
Lots of doom-and-gloomers here need to know this: it's not the United States where the currency, GDP, or stock makets have been wiped out and gone to zero....it's European countries and others that have had wars, hyperinflation, etc.
Today's foreign citizens have either experienced it themselves or heard about it from their parents or grandparents. They KNOW it's real. They don't give a DAMN about the Debt/GDP ratio of the dollar.... they know their money is safe in the United States and no country will ever conquer us.
That's IMPORTANT !!
You think Chinese citizens don't know about the CCP or Tiannamen Square ?
India recently had a de-monetization (100 bill becomes 10, 1000 becomes 100, etc.). You think they worry about the dollar -- or gold ?
The only economics that the Fed knows is a complete lie and anyone who believes that an economy can be supported by more debt creation doesn’t only fail in economics - they also fail in common sense.
To make the claim that one understands economics and financial markets but no one else does is nonsense.
To assume that history somehow isn’t relevant and is nothing to worry about…………….ignores the math.
Financial derivatives and massive deficit spending constitute an illicit and fraudulent shell game that has nothing but bad consequences for the US and the West.
Plan accordingly.
Q: Are You Printing Money? Bernanke: Not Literally
@Higashiyama said:
One (presumably) obvious point is that there are a vast number of steps between step 3 (the Federal Reserve Note) and step 4 (the Bank of Zimbabwe).
Yeah, usually there is a dictator and paramilitary involved. Hopefully we avoid that this year.
@stevek said:
Famous old saying: Those who forget the past are condemned to repeat it.
But if that is going to happen in 30 or 50 or 100 or 200 years...it's not something to worry about.
Those who do not KNOW economics and financial markets are worse than those forgetting the past.
Those who do not KNOW that it has been happening for decades and accelerated in 2008 are worse than those forgetting the past. "It" (if you refer to a destroyed currency) will happen in less than 30 years. So, if you're sixty or younger you should give it some (regulated) worry and prepare for the financial future of yourself and also for your heirs.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
@Higashiyama said:
One (presumably) obvious point is that there are a vast number of steps between step 3 (the Federal Reserve Note) and step 4 (the Bank of Zimbabwe).
Yeah, usually there is a dictator and paramilitary involved. Hopefully we avoid that this year.
Good thing we have been far from that for many years.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
@Higashiyama said:
One (presumably) obvious point is that there are a vast number of steps between step 3 (the Federal Reserve Note) and step 4 (the Bank of Zimbabwe).
Yeah, usually there is a dictator and paramilitary involved. Hopefully we avoid that this year.
Good thing we have been far from that for many years.
@jmski52 said:
The only economics that the Fed knows is a complete lie and anyone who believes that an economy can be >supported by more debt creation doesn’t only fail in economics - they also fail in common sense.
Nonsense....Economics 401 (Advanced !!) says that there is an optimal and maximum debt load that any corporate or sovereign buyer can handle. The U.S. is a very wealthy nation, and the Debt/GDP ratio is nowhere near where the Denominator Effect comes into play for a sovereign currency.
To make the claim that one understands economics and financial markets but no one else does is nonsense.
To assume that history somehow isn’t relevant and is nothing to worry about…………….ignores the math.
To say that you know more than virtually everybody else who have bet TRILLIONS while you have bet NOTHING and the folks who back up your position have also bet nothing and/or been wrong for DECADES....ignores the math of big $$$.
History is relevant but not if something comes true in 50 or 75 or 125 years.
Financial derivatives and massive deficit spending constitute an illicit and fraudulent shell game that has nothing >but bad consequences for the US and the West.
Again, we have a $25 trillion economy. Add 1% to real GDP growth and compound over 10 or 20 years. That's a nice windfall.
MMT is just that - a theory, albeit a bad one, based on the fantasy that you can get something for nothing.
If believing in such a fantasy keeps you employed, I can understand why you try to defend the ponzi - just know that it’s almost over, and you’ll have to learn a real skill soon.
Betting trillions makes you smart? Interesting. I think that gambling isn’t really a smart move in the final analysis, but go for it, man!
History is ALWAYS relevant. Ignorance isn’t bliss.
You can pull a 1% number out of your ass and compound it all you want, but that doesn’t make it true.
Interest on $36 trillion in debt creates a drag on the entire economy a lot more than 1%. Compound that!
To that number add another $1 trillion in OVERspending every 100 days.
You can’t print your way out of what the Fed has enabled.
Q: Are You Printing Money? Bernanke: Not Literally
@jmski52 said:
MMT is just that - a theory, albeit a bad one, based on the fantasy that you can get something for nothing.
I am not a believer in MMT. I believe in the Quantity Theory of Money, and making sure that any increase in money supply is offsetting falling velocity.
If believing in such a fantasy keeps you employed, I can understand why you try to defend the ponzi - just know that it’s almost over, and you’ll have to learn a real skill soon.
What if it isn't a Ponzi ? What if it is, but it takes 125 years to play out ? You're going to invest like the collapse will happen in your lifetime ?
Betting trillions makes you smart? Interesting. I think that gambling isn’t really a smart move in the final analysis, >but go for it, man!
If markets were a Ponzi Scheme...if the dollar or markets were going to collapse as you posit....folks who control trillions would not hold securities or dollars.
History is ALWAYS relevant. Ignorance isn’t bliss.
What history says the U.S. dollar is doomed ?
You can pull a 1% number out of your ass and compound it all you want, but that doesn’t make it true.
You sound like the Doom & Gloom Crowd from the 1970's who thought hyperinflation was coming....the dollar would collapse...interest rates would go up to 25%....and gold would hit $2,000 an ounce....all by 1983.
Interest on $36 trillion in debt creates a drag on the entire economy a lot more than 1%. Compound that!
Federal debt held by the public is $28 trillion not $36 trillion.
To that number add another $1 trillion in OVERspending every 100 days. You can’t print your way out of what the >Fed has enabled.
Sure you can. Nominal GDP growth is faster than nominal debt growth.
Only in ink and paper. A nation $34 Trillion in debt is far from being a very wealthy nation.
To say that you know more than virtually everybody else who have bet TRILLIONS while you have bet NOTHING and the folks who back up your position have also bet nothing and/or been wrong for DECADES....ignores the math of big $$$.
Those betting Trillon$ are betting with other people's money. Those betting nothing are actually betting with their own money. Who do you think makes more effort to truely understand the market?
History is relevant but not if something comes true in 50 or 75 or 125 years.
History is always relevant, but often ignored for 50 or 75 or 125 years.
Again, we have a $25 trillion economy. Add 1% to real GDP growth and compound over 10 or 20 years. That's a nice windfall.
Higher prices and higher taxes are not a windfall for the consumer/taxpayer.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
I am not a believer in MMT. I believe in the Quantity Theory of Money, and making sure that any increase in money supply is offsetting falling velocity.
When one looks at WHERE the increases in money supply end up one is fully justified to question their legitimacy.
What if it isn't a Ponzi ? What if it is, but it takes 125 years to play out ? You're going to invest like the collapse will happen in your lifetime ?
The collapse is happening. Paid your home or car insurance lately? Been to the grocery store?
If markets were a Ponzi Scheme...if the dollar or markets were going to collapse as you posit....folks who control trillions would not hold securities or dollars.
They will hold them until the last possible minute. Some will get burned, some will not. Think "musical chairs on the deck of the Titanic."
What history says the U.S. dollar is doomed ?
The history of the many countries before the US that followed the same economic path the US has currently chosen.
You sound like the Doom & Gloom Crowd from the 1970's who thought hyperinflation was coming....the dollar would collapse...interest rates would go up to 25%....and gold would hit $2,000 an ounce....all by 1983.
For a guy quoting history you seem to have forgotten the double digit inflation that peeked in 1981 and the Volker Shock (20% FED interest rates) that fortunately cooled inflation. With inflation ripping this economy apart our FED leader is hinting lower interest rates. LOL
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
@jmski52 said:
MMT is just that - a theory, albeit a bad one, based on the fantasy that you can get something for nothing.
If believing in such a fantasy keeps you employed, I can understand why you try to defend the ponzi - just know that it’s almost over, and you’ll have to learn a real skill soon.
Betting trillions makes you smart? Interesting. I think that gambling isn’t really a smart move in the final analysis, but go for it, man!
History is ALWAYS relevant. Ignorance isn’t bliss.
You can pull a 1% number out of your ass and compound it all you want, but that doesn’t make it true.
Interest on $36 trillion in debt creates a drag on the entire economy a lot more than 1%. Compound that!
To that number add another $1 trillion in OVERspending every 100 days.
You can’t print your way out of what the Fed has enabled.
All that debt and overspending is on Congress and Presidents.
@derryb said:
For a guy quoting history you seem to have forgotten the double digit inflation that peeked in 1981 and the Volker Shock (20% FED interest rates) that fortunately cooled inflation. With inflation ripping this economy apart our FED leader is hinting lower interest rates. LOL
Actually I think the promise of much lower interest rates came from the the orange man last week. Add a tariff tax and yippee!!!
What do you think jmski, will we get another change to lock in 18% interest rates for 30 years? We can dream, right?
@derryb said:
For a guy quoting history you seem to have forgotten the double digit inflation that peeked in 1981 and the Volker Shock (20% FED interest rates) that fortunately cooled inflation. With inflation ripping this economy apart our FED leader is hinting lower interest rates. LOL
Actually I think the promise of much lower interest rates came from the the orange man last week. Add a tariff tax and yippee!!!
What do you think jmski, will we get another change to lock in 18% interest rates for 30 years? We can dream, right?
Prez can't lower rates. A supposedly independent FED can.
FED cannot survive if it allows 18% interest rates for any length of time. It's not like they cant create negative interest rates at the drop of a dime.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
@derryb said:
For a guy quoting history you seem to have forgotten the double digit inflation that peeked in 1981 and the Volker Shock (20% FED interest rates) that fortunately cooled inflation. With inflation ripping this economy apart our FED leader is hinting lower interest rates. LOL
Actually I think the promise of much lower interest rates came from the the orange man last week. Add a tariff tax and yippee!!!
What do you think jmski, will we get another change to lock in 18% interest rates for 30 years? We can dream, right?
Prez can't lower rates. A supposedly independent FED can.
He said was gonna. Is he lying?
FED cannot survive if it allows 18% interest rates for any length of time. It's not like they cant create negative interest rates at the drop of a dime.
On X, economist E.J. Antoni, a research fellow in the Heritage Foundation's Grover M. Hermann Center for the Federal Budget, delved into the latest Monthly Treasury Statement from the Bureau of the Fiscal Service and recently posted:
"In June 2024, the U.S. government spent $140.238 billion on interest for Treasury debt securities. For context, the government collected $184.910 billion in individual income taxes that same month. The interest on the federal debt was equal to 76% of all personal income taxes collected in June - that's the Treasury's largest source of revenue and three-quarters of it gets consumed just by interest; does Congress know? Do they even care?”
Musk then responded: “I am glad 76% of the income tax I pay goes directly to important things like interest on past government incompetence.” He also posted earlier that, “America is going bankrupt, btw"
Even if a few of you disagree and think everything is wonderful, Elon has more than 189 million followers on X as of last month and can move markets. If the sentiment of the masses gets changed to be more concerned about the economy and stocks, and they start to consider gold and silver a bit more in their portfolios.
@Goldminers said:
On X, economist E.J. Antoni, a research fellow in the Heritage Foundation's Grover M. Hermann Center for the Federal Budget, delved into the latest Monthly Treasury Statement from the Bureau of the Fiscal Service and recently posted:
"In June 2024, the U.S. government spent $140.238 billion on interest for Treasury debt securities. For context, the government collected $184.910 billion in individual income taxes that same month. The interest on the federal debt was equal to 76% of all personal income taxes collected in June - that's the Treasury's largest source of revenue and three-quarters of it gets consumed just by interest; does Congress know? Do they even care?”
Musk then responded: “I am glad 76% of the income tax I pay goes directly to important things like interest on past government incompetence.” He also posted earlier that, “America is going bankrupt, btw"
And I bet we all wished we had the same tax rate as Musk.
We've all been hoping PMs would get more attention for a long time now. Is God listening?
This entire AI revolution is dominated by the U.S. and our companies. Do you know what an extra 1% real GDP growth does over 20 years to your fiscal position ? Like adding 5% to your average annual return from investments and seeing the difference 20 years later.
.
Contrarian indicator alert -
It certainly doesn't make a trend, but AI stocks performed especially poor today.
I still have not seen anything actually useful out of AI. As I stated before, reading "ChatBot" output is like eating empty calories. When AI starts to evolve on its own, and robots autonomously design and build other robots, that is when it will take off. This point in time is sometimes referred to as "the Singularity". Maybe this will be to our benefit or detriment ? No way to know and no way to know which companies (if any) will profit from it. Whomever is first will have a big advantage. What company might that be ? Pure speculation at this point.
But if there is a "Singularity", it will require a lot of copper and other important metals. Should a person invest in copper ? Maybe. Or maybe the robots will just come and forcibly take it without paying ?
I’ve read some of the commentary and find it interesting. My take is the U.S. has played the game of deficit spending and money creation for decades. The poor and middle class for the most part have suffered the consequences of dollar devaluation. Those people are either reliant on the government for their basic needs or increasingly two people are working two or more jobs to meet their needs.
The core issue is this tread is accelerating with no signs that the government at large is capable of bringing it under control. Debt to gdp is growing and I see no signs that the rate of increasing debt is going to slow and no signs that gdp can keep up with that growth.
This is all happening at the same time the number of people relying on the government for their existence is increasing. Every year a greater burden is placed on the government to keep this massive spending and debt cycle going and growing. We’re not going to borrow, tax or break this cycle via productivity gains. The idea that we’ve managed to keep with this for so long means it can carry forever doesn’t give me a lot of assurance. The idea that the U.S. is still the best of bad options doesn’t give me a lot of assurances.
The longer I live the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice is it possible for an empire to rise without His aid? Benjamin Franklin
@Goldminers said:
Even if a few of you disagree and think everything is wonderful, Elon has more than 189 million followers on X as of >last month and can move markets. If the sentiment of the masses gets changed to be more concerned about the >economy and stocks, and they start to consider gold and silver a bit more in their portfolios.
A global financial reserve currency and superpower will take many years to go under, even if financially incompetent.
As an example, Greece....a 3rd rate tourist-driven economy....embraced Socialism in 1980 and it took 30 years for the s*** to hit the fan.
I do agree we need entitlement reform, as well as Congressmen and women with basic financial and economic literacy. Democratic Socialists of America need not apply.
I agree completely if Elon talks up gold or silver, as happened with Dogecoin. But the effect would probably be fleeting.
Of course, repeated posts by Elon or Taylor Swift for gold or even $20 Double Eagles could cause a stampede. Imagine if a famous influencer with 20 MM followers (not that huge) were to say they were getting a 2-fer by buying DEs -- numismatic investing plus bullion investing -- and oh by the way they coins are beautiful and encompass American history.
@cohodk said:
And I bet we all wished we had the same tax rate as Musk.
His tax rate is higher than ours when he has income that it applies to. We could use a true flat tax so everybody would know that everybody is paying something.
In the 1960's, the bottom half of American filers paid 15% of all federal income taxes. Today, they pay 3%.
And yet, some say "The Rich" don't pay their "fair" share.
We've all been hoping PMs would get more attention for a long time now. Is God listening?
I’ve read some of the commentary and find it interesting. My take is the U.S. has played the game of deficit spending and money creation for decades. The poor and middle class for the most part have suffered the consequences of dollar devaluation. Those people are either reliant on the government for their basic needs or increasingly two people are working two or more jobs to meet their needs.
The core issue is this tread is accelerating with no signs that the government at large is capable of bringing it under control. Debt to gdp is growing and I see no signs that the rate of increasing debt is going to slow and no signs that gdp can keep up with that growth.
This is all happening at the same time the number of people relying on the government for their existence is increasing. Every year a greater burden is placed on the government to keep this massive spending and debt cycle going and growing. We’re not going to borrow, tax or break this cycle via productivity gains. The idea that we’ve managed to keep with this for so long means it can carry forever doesn’t give me a lot of assurance. The idea that the U.S. is still the best of bad options doesn’t give me a lot of assurances.
+1
Q: Are You Printing Money? Bernanke: Not Literally
I did not say that high rates were not the cure. Russia is correct if they wish to cure inflation. I said that the FED will not pursue high rates. FED is in self survival mode when it comes to managing the economy. Paul Volkers are like Ronald Reagans, a thing of the past. Public decisions are now made based on what is best for those making the decision.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Guess I'm not as good at understanding charts as I thought I was. Shouldn't the title be First Time Since Vietnam War? Looks like the holdings had been increasing up to 1965, then was on a downward trend until more recent times? But I'm no expert.
@tincup said:
Guess I'm not as good at understanding charts as I thought I was. Shouldn't the title be First Time Since Vietnam War? Looks like the holdings had been increasing up to 1965, then was on a downward trend until more recent times? But I'm no expert.
Good point...I think some CBs weren't reporting right after WW II (esp. communist countries). I'll dig a bit further.
Comments
The fuel for credit creation is debt. Also known as Fractional Banking it allows banks to loan out 90% of their deposits which in turn creates "new" money.
Lest we forget that largest portion of currency in circulation was printed out of thin air since 2008 under the guise of "quantative easing (QE)," which is a more palatable term for "currency debasement."
Modern Monetary Theory (MMT) or the Magic Money Tree illustrated:
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
@GoldFinger1969 commented: The currency in circulation is what is called "high-powered money" and is the fuel for credit creation. That increase in HPM led to the boost in the monetary aggregates, notably M1, M2, and M3. HPM boosts lead to increased M1...more of a boost to M2....and usually more M3.
The big boost was necessary to counter the drop in velocity.
Milton Friedman, Quantity Theory of Money: MV = PQ "
Especially regarding "the big boost was necessary to counter the drop in velocity", it is an interesting point to ponder. But, I wonder if the cause and effect (loosely using this term) is in the opposite direction? That is, most of the money recently created has gone into the hands of people who don't need to spend it; they don't spend it, and this results in a drop in velocity. (during part of the COVID era, much of the new money was being spent, and this accounts for the significant uptick in inflation for some period)
The case has been made. The metal of Kings painting new all-time highs while the gutter is stuck in the gutter half what it was 40+ years ago. NORTH! THKS!!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
$2,470.....ATH
Almost halfway to $5,000.....
And that's what makes silver the play of the decade. Keep buying that gold at all time highs. LOL
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Platinum is only 45% of its 2008 high, with perhaps a very interesting chart pattern.
Knowledge is the enemy of fear
Long-term fundamentals there in doubt given ICE and BEVs.
Don't know much about chart patterns.... but if ICE vehicle production starts picking up next year, the platinum may have some increases. Might be desirable to get ahead of that curve.
History is strewn with examples of worthless items trading for obscene prices. In fact, today's society has placed a trillion dollar value on something no one has even seen.
Knowledge is the enemy of fear
I don't agree because I think that all time high was the product of massive manipulation. That four year period where silver was above $30 (as high as $48) was followed by ten years of silver being in the teens and twenties. I think the low to mid twenties represents the legitimate range of all time highs for silver and this $30 range does represent the legitimate new all time high.
Yes, the all time high was likely due to massive electron/paper manipulations. Just like back in the Hunt era. Very hard for the average person to be able to tell what true price discovery level is, and whether price is at a good buying... or selling.... level.
And quite a few view silver and gold for the insurance aspect.... keeping a diverse basket of investments, and not expecting to 'play' the market buying and selling to try to time a profit.
It is up now because of market fundamentals, something that was missing the last two decades. While gold has always told us the price of a dollar (in fractions of an ounce), silver is beginning to do the same. Both serve a role as industrial metals yet silver, like gold, is once again (as it was pre 1965) becoming a monetary metal. In the face of dollar destruction by central bank policy and unbridled sovereign spending, this return as a monetary metal is what will drive silver up more than anything.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Should silver ever decisively break above $50 an ounce, it will be seen as breaking a previous double-top set in 1980 (Hunt Brothers) and then 2011. I suspect that would gather lots of attention and be very bullish.
My US Mint Commemorative Medal Set
Famous old saying: Those who forget the past are condemned to repeat it.
But if that is going to happen in 30 or 50 or 100 or 200 years...it's not something to worry about.
Those who do not KNOW economics and financial markets are worse than those forgetting the past.
"Those who do not KNOW economics and financial markets are worse than those forgetting the past."
It may very well be a combination of everything.
One (presumably) obvious point is that there are a vast number of steps between step 3 (the Federal Reserve Note) and step 4 (the Bank of Zimbabwe).
A related observation: the British debt to GDP situation in 1945 was worse than ours is now. Though the pound has lost a lot of value since then, it is still a viable currency and Britain is a stable, prosperous place.
Excellent points.
I've managed large sums of money and I can tell you that wealthy individuals, SWFs, CBs, and institutions are NOT putting money into illiquid markets where the rule of law and private property rights are NOT protected by checks-and-balances.
NOBODY is entrusting their $$$ or Euros or Francs with Putin or the Chinese Communist Party.
This entire AI revolution is dominated by the U.S. and our companies. Do you know what an extra 1% real GDP growth does over 20 years to your fiscal position ? Like adding 5% to your average annual return from investments and seeing the difference 20 years later.
I have to see the latest SIFMA trading volumes but the U.S. Treasury and MBS markets trade about $850-$900 billion a year with the next highest liquid market being either U.S. Corporates (~$30 BB a day) or British Gilts ($25 BB daily).
Now....if you need to invest $10 BB without moving the market, where the hell can you go ?
Mark Mobius, the Indiana Jones of emerging markets investments, was on TV yesterday and mentioned he was bullish on gold and that Indians loved gold.
Lots of doom-and-gloomers here need to know this: it's not the United States where the currency, GDP, or stock makets have been wiped out and gone to zero....it's European countries and others that have had wars, hyperinflation, etc.
Today's foreign citizens have either experienced it themselves or heard about it from their parents or grandparents. They KNOW it's real. They don't give a DAMN about the Debt/GDP ratio of the dollar.... they know their money is safe in the United States and no country will ever conquer us.
That's IMPORTANT !!
You think Chinese citizens don't know about the CCP or Tiannamen Square ?
India recently had a de-monetization (100 bill becomes 10, 1000 becomes 100, etc.). You think they worry about the dollar -- or gold ?
The only economics that the Fed knows is a complete lie and anyone who believes that an economy can be supported by more debt creation doesn’t only fail in economics - they also fail in common sense.
To make the claim that one understands economics and financial markets but no one else does is nonsense.
To assume that history somehow isn’t relevant and is nothing to worry about…………….ignores the math.
Financial derivatives and massive deficit spending constitute an illicit and fraudulent shell game that has nothing but bad consequences for the US and the West.
Plan accordingly.
I knew it would happen.
Yeah, usually there is a dictator and paramilitary involved. Hopefully we avoid that this year.
Knowledge is the enemy of fear
Those who do not KNOW that it has been happening for decades and accelerated in 2008 are worse than those forgetting the past. "It" (if you refer to a destroyed currency) will happen in less than 30 years. So, if you're sixty or younger you should give it some (regulated) worry and prepare for the financial future of yourself and also for your heirs.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Good thing we have been far from that for many years.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Depends how weak we want to be.
Knowledge is the enemy of fear
Nonsense....Economics 401 (Advanced !!) says that there is an optimal and maximum debt load that any corporate or sovereign buyer can handle. The U.S. is a very wealthy nation, and the Debt/GDP ratio is nowhere near where the Denominator Effect comes into play for a sovereign currency.
To say that you know more than virtually everybody else who have bet TRILLIONS while you have bet NOTHING and the folks who back up your position have also bet nothing and/or been wrong for DECADES....ignores the math of big $$$.
History is relevant but not if something comes true in 50 or 75 or 125 years.
Again, we have a $25 trillion economy. Add 1% to real GDP growth and compound over 10 or 20 years. That's a nice windfall.
MMT is just that - a theory, albeit a bad one, based on the fantasy that you can get something for nothing.
If believing in such a fantasy keeps you employed, I can understand why you try to defend the ponzi - just know that it’s almost over, and you’ll have to learn a real skill soon.
Betting trillions makes you smart? Interesting. I think that gambling isn’t really a smart move in the final analysis, but go for it, man!
History is ALWAYS relevant. Ignorance isn’t bliss.
You can pull a 1% number out of your ass and compound it all you want, but that doesn’t make it true.
Interest on $36 trillion in debt creates a drag on the entire economy a lot more than 1%. Compound that!
To that number add another $1 trillion in OVERspending every 100 days.
You can’t print your way out of what the Fed has enabled.
I knew it would happen.
I am not a believer in MMT. I believe in the Quantity Theory of Money, and making sure that any increase in money supply is offsetting falling velocity.
What if it isn't a Ponzi ? What if it is, but it takes 125 years to play out ? You're going to invest like the collapse will happen in your lifetime ?
If markets were a Ponzi Scheme...if the dollar or markets were going to collapse as you posit....folks who control trillions would not hold securities or dollars.
What history says the U.S. dollar is doomed ?
You sound like the Doom & Gloom Crowd from the 1970's who thought hyperinflation was coming....the dollar would collapse...interest rates would go up to 25%....and gold would hit $2,000 an ounce....all by 1983.
Federal debt held by the public is $28 trillion not $36 trillion.
Sure you can. Nominal GDP growth is faster than nominal debt growth.
Only in ink and paper. A nation $34 Trillion in debt is far from being a very wealthy nation.
Those betting Trillon$ are betting with other people's money. Those betting nothing are actually betting with their own money. Who do you think makes more effort to truely understand the market?
History is always relevant, but often ignored for 50 or 75 or 125 years.
Higher prices and higher taxes are not a windfall for the consumer/taxpayer.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
When one looks at WHERE the increases in money supply end up one is fully justified to question their legitimacy.
The collapse is happening. Paid your home or car insurance lately? Been to the grocery store?
They will hold them until the last possible minute. Some will get burned, some will not. Think "musical chairs on the deck of the Titanic."
The history of the many countries before the US that followed the same economic path the US has currently chosen.
For a guy quoting history you seem to have forgotten the double digit inflation that peeked in 1981 and the Volker Shock (20% FED interest rates) that fortunately cooled inflation. With inflation ripping this economy apart our FED leader is hinting lower interest rates. LOL
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
All that debt and overspending is on Congress and Presidents.
Knowledge is the enemy of fear
Actually I think the promise of much lower interest rates came from the the orange man last week. Add a tariff tax and yippee!!!
What do you think jmski, will we get another change to lock in 18% interest rates for 30 years? We can dream, right?
Knowledge is the enemy of fear
Prez can't lower rates. A supposedly independent FED can.
FED cannot survive if it allows 18% interest rates for any length of time. It's not like they cant create negative interest rates at the drop of a dime.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
He said was gonna. Is he lying?
I only need a day at 18%.
Knowledge is the enemy of fear
On X, economist E.J. Antoni, a research fellow in the Heritage Foundation's Grover M. Hermann Center for the Federal Budget, delved into the latest Monthly Treasury Statement from the Bureau of the Fiscal Service and recently posted:
"In June 2024, the U.S. government spent $140.238 billion on interest for Treasury debt securities. For context, the government collected $184.910 billion in individual income taxes that same month. The interest on the federal debt was equal to 76% of all personal income taxes collected in June - that's the Treasury's largest source of revenue and three-quarters of it gets consumed just by interest; does Congress know? Do they even care?”
Musk then responded: “I am glad 76% of the income tax I pay goes directly to important things like interest on past government incompetence.” He also posted earlier that, “America is going bankrupt, btw"
Even if a few of you disagree and think everything is wonderful, Elon has more than 189 million followers on X as of last month and can move markets. If the sentiment of the masses gets changed to be more concerned about the economy and stocks, and they start to consider gold and silver a bit more in their portfolios.
My US Mint Commemorative Medal Set
And I bet we all wished we had the same tax rate as Musk.
We've all been hoping PMs would get more attention for a long time now. Is God listening?
Knowledge is the enemy of fear
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Contrarian indicator alert -
It certainly doesn't make a trend, but AI stocks performed especially poor today.
I still have not seen anything actually useful out of AI. As I stated before, reading "ChatBot" output is like eating empty calories. When AI starts to evolve on its own, and robots autonomously design and build other robots, that is when it will take off. This point in time is sometimes referred to as "the Singularity". Maybe this will be to our benefit or detriment ? No way to know and no way to know which companies (if any) will profit from it. Whomever is first will have a big advantage. What company might that be ? Pure speculation at this point.
But if there is a "Singularity", it will require a lot of copper and other important metals. Should a person invest in copper ? Maybe. Or maybe the robots will just come and forcibly take it without paying ?
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I’ve read some of the commentary and find it interesting. My take is the U.S. has played the game of deficit spending and money creation for decades. The poor and middle class for the most part have suffered the consequences of dollar devaluation. Those people are either reliant on the government for their basic needs or increasingly two people are working two or more jobs to meet their needs.
The core issue is this tread is accelerating with no signs that the government at large is capable of bringing it under control. Debt to gdp is growing and I see no signs that the rate of increasing debt is going to slow and no signs that gdp can keep up with that growth.
This is all happening at the same time the number of people relying on the government for their existence is increasing. Every year a greater burden is placed on the government to keep this massive spending and debt cycle going and growing. We’re not going to borrow, tax or break this cycle via productivity gains. The idea that we’ve managed to keep with this for so long means it can carry forever doesn’t give me a lot of assurance. The idea that the U.S. is still the best of bad options doesn’t give me a lot of assurances.
A global financial reserve currency and superpower will take many years to go under, even if financially incompetent.
As an example, Greece....a 3rd rate tourist-driven economy....embraced Socialism in 1980 and it took 30 years for the s*** to hit the fan.
I do agree we need entitlement reform, as well as Congressmen and women with basic financial and economic literacy. Democratic Socialists of America need not apply.
I agree completely if Elon talks up gold or silver, as happened with Dogecoin. But the effect would probably be fleeting.
Of course, repeated posts by Elon or Taylor Swift for gold or even $20 Double Eagles could cause a stampede. Imagine if a famous influencer with 20 MM followers (not that huge) were to say they were getting a 2-fer by buying DEs -- numismatic investing plus bullion investing -- and oh by the way they coins are beautiful and encompass American history.
You'd see prices move 25% in a week.
His tax rate is higher than ours when he has income that it applies to. We could use a true flat tax so everybody would know that everybody is paying something.
In the 1960's, the bottom half of American filers paid 15% of all federal income taxes. Today, they pay 3%.
And yet, some say "The Rich" don't pay their "fair" share.
Supply and Demand are.
I’ve read some of the commentary and find it interesting. My take is the U.S. has played the game of deficit spending and money creation for decades. The poor and middle class for the most part have suffered the consequences of dollar devaluation. Those people are either reliant on the government for their basic needs or increasingly two people are working two or more jobs to meet their needs.
The core issue is this tread is accelerating with no signs that the government at large is capable of bringing it under control. Debt to gdp is growing and I see no signs that the rate of increasing debt is going to slow and no signs that gdp can keep up with that growth.
This is all happening at the same time the number of people relying on the government for their existence is increasing. Every year a greater burden is placed on the government to keep this massive spending and debt cycle going and growing. We’re not going to borrow, tax or break this cycle via productivity gains. The idea that we’ve managed to keep with this for so long means it can carry forever doesn’t give me a lot of assurance. The idea that the U.S. is still the best of bad options doesn’t give me a lot of assurances.
+1
I knew it would happen.
But maybe Russia can? Haha.
Russia Opts for Big Rate Hike as Faster Inflation Thwarts Easing https://www.bloomberg.com/news/articles/2024-07-26/russia-opts-for-big-rate-hike-as-faster-inflation-thwarts-easing
Knowledge is the enemy of fear
I did not say that high rates were not the cure. Russia is correct if they wish to cure inflation. I said that the FED will not pursue high rates. FED is in self survival mode when it comes to managing the economy. Paul Volkers are like Ronald Reagans, a thing of the past. Public decisions are now made based on what is best for those making the decision.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
I believe Secretary of the US Treasury just promoted $7500 gold.
Seeks (Just) $78 Trillion To Fight Climate Change
A bit of newly printed MMT money here, a bit of newly printed MMT money there. . . They're afraid to call it by its real name:
"QE."
What they want you to think Quantitative Easing Is (A good thing):
What QE really is (money printing):
And what QE does: makes the rich richer, our treasury poorer and creates more taxes for the actual taxpayers.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
and a central bank that funds them with new money at the expense of those holding old money.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Almost at $2,500.
Gold holdings increasing for the first time since WW II:
Guess I'm not as good at understanding charts as I thought I was. Shouldn't the title be First Time Since Vietnam War? Looks like the holdings had been increasing up to 1965, then was on a downward trend until more recent times? But I'm no expert.
Central banks have been increasing their gold holdings for the past 15 years, and the rate has also been increasing. This isn't new information.
I knew it would happen.
Good point...I think some CBs weren't reporting right after WW II (esp. communist countries). I'll dig a bit further.