Could the fiat currency system be finally at an end?
Even if the fiat currency does survive until August, the 50th anniversary of President Richard M. Nixon's repudiation of the Bretton Woods agreement that US dollars could be redeemed in gold is tragically ironic for central bankers.
But, probably not. The majority of people still want to be paid in $US dollars, at least in the United States. And what may be the only thing standing in the way of a complete currency revaluation, or reset, is normalcy bias, the acceptance of what is commonplace today.
For now.
The future is usually murky, but it can be predictable, as in the case of the longevity of your run-of-the-mill fiat currency, which is about 37.5 years. The fiat $US dollar will turn 50 in August, along with every other currency it trades against. All of them. At some point, nobody will want to hold $US dollars or hold assets in $US dollars, or euros, pounds, looneys, yen, yuan, francs. It is at that point that the currency becomes not only worthless, but a burden upon the citizenry of the nation so cursed as to have, as a national basis, the devalued, debased currency, or, in a global meltdown, currencies.
It is at that point that the currency or currencies collapses and ceases, for all intents and purposes, to exist. We are not there yet.
But, we're getting closer.
The change will be sudden.
The charges of the world, the lackeys of the central banking cartel and government wonks will come up with some solution suitable to themselves, primarily, but their days are over. The world does not belong to Janet Yellen, Jerome Powell, Jamie Dimon, Christine Lagarde, Joe Biden. The true thought leaders in economics are Max Keiser, Mike Maloney, James Rickards, Willem Middelkoop, Michael Saylor, Elon Musk, the people working behind the scenes at PayPal, Stripe, and their ilk. Their day is arriving, if not now, then very shortly.
It's likely that the old guard will announce some new scheme incorporating the dollar, the yuan, yen, oil, gold, the World Bank's SDRs (Special Drawing Rights) wrapped into a cryptocurrency-like apparatus, to which many people of the world will respond, "sorry, we're going with gold, silver, and bitcoin." Many will have no choice, or believe they have no choice but to accept the government-sponsored currency. Having no choice and believing one has no choice are one and the same thing. Those people will be poor forever. Those enlightened to a new currency revolution will have choices and better lives.
Then, life will become so much more interesting, engaging, appealing. When people shake off the yoke of financial repression and control and begin to make strides for self-determination in economic fortune, then the world will turn in many positive ways.
The only alternatives to a debasing dollar for anybody trying to preserve asset value or purchasing power are precious metals and cryptocurrencies. Those have been explosive market segments of late, though the metals have been severely suppressed by global interests while Bitcoin remains unassailable, seemingly immune to the vicious verbal attacks from the likes of Janet Yellen and Christine Lagarde.
Which brings us to bonds, and why you should hold NONE in your portfolio. ZERO.
It's simple, really. Bonds are what finance everything in the fiat realm, from corporate stock buybacks to mortgages, car loans and money for the government. The Federal government is overspending at an astonishing pace. Last year's federal deficit was $3.1 trillion. This year's will be larger. Joe Biden and his Democrat pals in congress are hell-bent on spending $1.9 trillion that they don't have on a COVID relief package. The federal deficit is already $3.1 trillion, according to the US debt clock, but that may not be accurate. It’s probably closer to $700 billion, but we’re not even half way through the current fiscal year, which started October 1, 2020, and ends on September 30, 2021.
What is accurate is that the federal debt (government) grows by $2.7 million every minute. That's $162 million an hour, $3.888 billion a day. The total federal debt is currently $27.894 trillion. Another $106 billion in debt will move it past $28 trillion. That will occur in 27 days, or right around March 9 or 10, or right about the time congress approves another $1.9 trillion in a “relief” package, so, there's a very real chance that before the April 15 income tax filing deadline, the federal government's debt will be over $30 trillion.
Were American citizens to pay back that debt via taxes, it would amount to roughly $85,000 per person. If the government balanced its books and incurred no more debt, first, the economy would collapse, that's a given, but, in such an event, if every citizen paid back an additional $5,000 in taxes earmarked for the debt, it would take 17 years to pay it all off. Obviously, none of this is ever going to happen. It's as close to an impossibility as the moon crashing into the earth. There's probably a better probability of an asteroid hitting Washington, DC directly (wishful thinking).
Therefore, why would anybody hold a bond of any kind, when the return on even the safest, most reliable, is two percent (2.0%) and inflation is close to eight percent (8.0%) if not beyond that. A bond with a 2.0% yield would lose 6.0% in purchasing power every year and even more if inflation heats up further (it will). Over the course of 30 years, your total return becomes a worthless footnote in the pantheon of failed economic ideas.
Meanwhile, stocks are growing at 10-20-30% or more every year. Bitcoin tripled in the past three months. Silver is going to skyrocket over $100 within two years (market price already benchmarked at $41.22). Gold should be closer to $10,000 than $2,000 an ounce.
The only reason to hold a bond of any kind is if you want or need to lose purchasing power, and there's very few people who are so desirous. They are also likely to be delerious.
So, bonds? No. No bonds.
The federal debt is never going to be repaid. That's obvious. Likewise, many student loans are going to be either forgiven or left unpaid, defaulted upon. Mortgages, equity loans and lines of credit, credit cards, car loans, personal loans, payday loans and anything that has the word "loan" attached to it are going to go unpaid. Many people will go bust. The federal government is broke. Most banks are, if not already bankrupt, illiquid and close to insolvent.
The coming financial crisis is going to be like nothing anyone has ever seen before. There is going to be suffering on a scale unknown in human history. It's baked in, given the reckless policies of the federal government and the central bank, the Federal Reserve over the past 50 years. It's been a long time coming - since 1971, when the world abandoned what was left of the gold standard - but it's arriving sooner than most people can imagine.
Already there are signs of desperation. Covid (scam). Vaccines (extra scam). Lockdowns (unconstitutional). Lines at food banks. Fake president. Censorship. Currency direct from government to citizens for doing nothing. It cannot last much longer or the world will become enslaved to debt and central banks for generations.
The fiat era is nearly over, and as soon as the bond bust is realized, it will be apparent to just about everybody. The 10-year note currently yields about 1.15%. Figure the 10-year note at 1.65% to be the breaking point. That would put the 30-year at about 2.40-2.60%. When the 10-year note yields 1.25%, look out. If it continues past 1.40%, the end is near. After that, if you don't own bitcoin, gold, silver, real estate or some hard assets, you will be toast.
A currency revolution is the only answer. The revolutionary currency will be not one created by the people who promoted the crisis in the first place - the usual government and financial suspects - but a currency or currencies outside the banking system: crypto, gold, silver, barter.
The revolution has already begun. Join it.
On the cusp of a central banking beakdown, here's Max Keiser and Stacy Herbert nailing it as usual, along with a segment with Mike Maloney, who calls out the Fed for counterfeiting (which, in fact, is at the heart of central bank monetary policy).
At the Close, Tuesday, February 10, 2021:
Dow: 31,375.83, -9.97 (-0.03%)
NASDAQ: 14,007.70, +20.06 (+0.14%)
S&P 500: 3,911.23, -4.36 (-0.11%)
NYSE: 15,244.40, +17.80 (+0.12%)
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