Set Free From Gold, the Fed and Both Aisles Ruined America
Gary Tanashian

With gold no longer an austerity anchor, the Fed and both aisles of government have brought America to this point – call in the Screw Worm!

Pardon the mostly non-market related post. But it’s something I’ve wanted to put in writing for a long time. The Fed is at the controls of the inflation-making machinery in the US (as are global central banks in their own countries).

Inflation does not just appear, as if by some mystical financial mechanism. Inflation is produced with the ease of firing up the printing press. More dollars + finite assets = asset prices rising in those inflated dollars. Not rocket science.

Over the years and decades of this ongoing inflation by policy, the rich (asset owner class) naturally get richer and the not rich (middle and working classes, those living paycheck-to-paycheck, and the poor) get poorer. Again, not rocket science.

But in not understanding the nature of this inflationary disenfranchisement, the general public is led to despise and fear the members of the public on the “other” side (personally, I make like Bob Dylan channeling Joey Gallo… “always on the outside of whatever side there was”).

Enter the din of social media dissonance, traditional media that fewer and fewer people trust (not to be driving political agenda) and modern technology (e.g. YouTube and all its variants) basically putting an overwhelming majority (in my opinion) of the population in their chosen, biased and algo-driven information silos. Now you’ve got mass identification with one aisle or the other. Democrat or Republican. Neo-liberal or neo (con)-conservative.

And under exactly whom has the Fed operated with impunity all these decades? Democrats… AND Republicans! This is beyond politics. The “Uniparty” operates as well either way. The Uniparty supports foreign wars, and spends tax dollars on boondoggles that have increased the national debt to sublime levels.

The Uniparty is given its means by a central bank that always defaults to monetary inflation (again, money printing, not prices somehow rising on their own).* Then the government turns around and spends that money into its favored areas of the interest and global adventuring, which fiscally delivers the inflation to the economy.

There are so many moving parts to the ongoing story of the ruination of America. But I am a financial guy and I’ll present just one picture and a major conclusion that cannot be argued. First, other facts that cannot be argued:

• Gross Domestic Product has been rising throughout the history of modern America.
• GDP began accelerating since Nixon closed the gold window in 1971.
• The Public Debt is now $38.5 Trillion and rising sharply since a supposedly revolutionary (MAGA) Republican took office with a Republican House/Senate acting as his tailwind. So much for conservatism.
• This debt pile has risen faster than GDP since another “conservative” took office in 1980. The Debt-to-GDP graph below is fact, direct from the Fed itself.

Conclusion

Under a system set free from gold’s imposed austerity, an anchor to sound finance and hence, a sound society, is a distant memory. As GDP rises, the debt we all carry rises even more. And America’s Debt-to-GDP appears to be turning up yet again.

The United States of America lives on its ability to increase the debt. Period. America is not alone in this condition. But that’s a wider (global macro) story.

St. Louis Fed

Political Infighting is a Distraction

Again, silos (and the algo-curated information they administer). Those who want to call Moms “gestating parents” and dads “non-gestating parents” in one silo. Those still wearing red hats and believing America will be “great again” if only God, guns ** and a roll-back of America’s progress will again be the way of the land, in another silo. And oh so many silos in between.

Meanwhile, who is financing it all, no matter the figurehead party supposedly in control? Our trusty financial overseers at the Federal Reserve. The grey shaded areas on the graph above represent recessions. Governments in power at such times simply cannot have real economic bust cycles because, well, let’s just say it is not politically expedient.

The national debt (nominal and ‘to-GDP’) climbs every time there is a natural economic down cycle. This debt creation in support of keeping the economy (and assets of all kinds, from stocks/corporate interests to land/property) growing increases prices, including the broad class known as “assets”. But it also includes the items that people need like, you know, food. Like day care. Like healthcare.

Back in their respective silos, the populace is at least figuratively driven mad – or at least ignorant – because so many people hate the people in other silos unlike their own. They consider them threats to their favored way of life.

Meanwhile, who accuses the Fed of any wrong doing? Please don’t give me Trump and his attack on Jerome Powell for cost overruns on a building. The Fed has created cost overruns, alright. These overruns accumulated upon the macro over decades of systematic inflationary policy. Meanwhile, the ultimate vigilante, the bond market, has finally rebelled with its new and major cyclical trend of inflation signaling.

New Fed chief Warsh is already in over his head and he probably knows it. He is looking at a binary choice on the Fed Funds rate; either fight the bond market or fight Trump.

Ron Paul understood what the Fed is. He was ignored by all but a conservative/Libertarian few. But his time has passed. Thomas Massie may have that potential, as may Ron’s son, Rand. We shall see.

MAGA is now a Zombie army, wearing red hats atop silo-curated brains. Marjorie Taylor Green and Tucker Carlson are long-since gone and Joe Rogan looks like he’s gauging which way the wind is blowing. What’s left? The hats. That’s about it.

A lyric from one of my songs about the whole lot of them, silo’d on the right and the left:

An army of zombies, marching in a line

Some wearing jack boots

Some just out of their minds

I am a malcontented sort, and that is how I see society. On both sides of this corrupt thing we call politics. Party is largely irrelevant when set against the true compromiser of society. But it’s getting more dangerous due to constant silo’d, bias reinforcing messages to everyday people, and the enemy-making that results from them.

MAGA was a movement that, regardless of whether or not you agreed with its basic tenets, had conviction to the degree that it was able to lift a reality TV star to the highest office in the land. There were many good, well-meaning people involved (with some miscreants), I am sure. But they were misled.

Across the aisle, well, I don’t have to tell you how stale those people are. The leadership, anyway. They are the other face of the Uniparty. Can younger members break free to the degree of independence that Massie has? If so, they will be worth consideration, much like Massie, with whom I don’t agree on several issues, but who I like… a lot (it’s the old “I’d like to have a beer with the guy” test). He tells the truth as he sees it. That’s integrity.

Unfortunately, nothing I see appears to have the potential to alter the perceptions of the masses as to where the real problem exists, in the halls of the great monetary central planning institution and in the stranglehold the Uniparty has on the country.

Maybe the damn Screw Worm will get into those silos and bore some holes in peoples’ brains on both curated sides, to relieve the pressure and allow more independent thought.

Unfortunately, over the years I have realized that a good portion of the gold cult “community”, as it calls itself, is overly promotional and a bit dogmatic, as it rails against the fiat debt-paper system in a perma black & white manner.

Gold is simply value, extended over decades and centuries. It holds value, provides insurance and otherwise reflects what is going on around it. In other words, when confidence in the system is high, gold under-performs. When confidence declines, gold booms. In reality, it is merely a barometer. 

The monetary metal is misunderstood as a supposed inflation hedge. One prominent example is provided by “expert” academics Harvey & Erb, purveying an obsession with gold and inflation. When your assumptions are wrong, so will be your analysis. “Expert” analysis of gold as an inflation hedge has been and continues to be wrong in its singular focus.

Back on the gold bug “community”, my view of its promotional aspects not only bleeds into my public writing (a reader, several years ago: “are you trying to become the most hated person in Goldbugville?”), but has also helped me evolve NFTRH analysis to be sure it is dealing with the reality of any given macro phase, aside from my personal idealistic views. Market realities are more often than not unaligned with our ideals.

So when I am able to call “bullish” on gold, you know it is not a perma-call. It is the right call. Truthful analysis above bias and ideology, at all times! This works in reverse as well. I will not call bearish on stock markets unless/until the internal indications signal strong alerts and/or market trends (short-term to longer-term) start to break. 

As to gold, the above is the purist view. But there is also a speculative view, which revolves around quality gold mining, development, royalty and exploration stocks. That is where the fun comes in. 

NFTRH was rightly negative on gold stock fundamentals for many years as the macro was not conducive to a bullish view. But beginning in 2022, when the macro made profound changes, that view changed as well. Unbiased… that’s the only way to be. Hence, when I am able to be bullish, it is for the right reasons and thus, it is trustworthy.

That is what NFTRH is. Whether analyzing precious metals, U.S./Global stock markets, commodities, bonds, etc., the mission is to be on the right side during any given market phase. Not to have a pre-determined ideology proven out after perhaps years of futility. 

Remaining unbiased is harder than it looks. It takes work. It takes discipline. It takes TOOLS. At NFTRH, we employ those aspects every day. The result is consistent success for myself and subscribers.

But probably not. Until the monetary realm is more widely understood and the Fed is clearly seen as the agent of inflation, it’s not going to get any better. But it sure could get worse if that debt pile starts to unwind of its own bloat.

Meanwhile, as I write this article the least productive segments of society continue to keep up economic appearances.

* War-driven oil prices and other effects of geopolitical decisions are the temporary result of those decisions. They are not inflation, which is always a monetary condition.

** Relax, I am a gun owner. Stop taking everything so literally and seriously.

 

First and foremost, I am a gold bug. If “gold bug” means strongly favoring a more straightforward monetary system (not run entirely on inflation created by a central planning agency). That would level the playing field for a much wider segment of the population.

Unfortunately, over the years I have realized that a good portion of the gold cult “community”, as it calls itself, is overly promotional and a bit dogmatic, as it rails against the fiat debt-paper system in a perma black & white manner.

Gold is simply value, extended over decades and centuries. It holds value, provides insurance and otherwise reflects what is going on around it. In other words, when confidence in the system is high, gold under-performs. When confidence declines, gold booms. In reality, it is merely a barometer. 

The monetary metal is misunderstood as a supposed inflation hedge. One prominent example is provided by “expert” academics Harvey & Erb, purveying an obsession with gold and inflation. When your assumptions are wrong, so will be your analysis. “Expert” analysis of gold as an inflation hedge has been and continues to be wrong in its singular focus.

Back on the gold bug “community”, my view of its promotional aspects not only bleeds into my public writing (a reader, several years ago: “are you trying to become the most hated person in Goldbugville?”), but has also helped me evolve NFTRH analysis to be sure it is dealing with the reality of any given macro phase, aside from my personal idealistic views. Market realities are more often than not unaligned with our ideals.

So when I am able to call “bullish” on gold, you know it is not a perma-call. It is the right call. Truthful analysis above bias and ideology, at all times! This works in reverse as well. I will not call bearish on stock markets unless/until the internal indications signal strong alerts and/or market trends (short-term to longer-term) start to break. 

As to gold, the above is the purist view. But there is also a speculative view, which revolves around quality gold mining, development, royalty and exploration stocks. That is where the fun comes in. 

NFTRH was rightly negative on gold stock fundamentals for many years as the macro was not conducive to a bullish view. But beginning in 2022, when the macro made profound changes, that view changed as well. Unbiased… that’s the only way to be. Hence, when I am able to be bullish, it is for the right reasons and thus, it is trustworthy.

That is what NFTRH is. Whether analyzing precious metals, U.S./Global stock markets, commodities, bonds, etc., the mission is to be on the right side during any given market phase. Not to have a pre-determined ideology proven out after perhaps years of futility. 

Remaining unbiased is harder than it looks. It takes work. It takes discipline. It takes TOOLS. At NFTRH, we employ those aspects every day. The result is consistent success for myself and subscribers.

 

  

 

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