International Guy: The US government has printed more cash just recently than it has in its nearly 250-year existence.
It’s the biggest monetary surge that has actually ever taken place in the United States, and it shows no sign of decreasing.
Market prices are currently beginning to skyrocket.
Where is this all headed? Is inflation out of control?
Doug Casey: It does not look terribly out of control yet on a retail level. A Huge Mac is normally under $5, and gas is around $3. The tens of countless Americans earning $10– 15 an hour can still scrape by after taking in a roomie to cover rent at state $1000 a month– specifically since countless them are still stiffing their property managers with rent and mortgage “forbearance.” But as that disappears and a radical wave of inflation cleans over the country, a great deal of them will wind up on the street.
The US monetary and financial scenario is going to get ridiculous, with the Fed monetizing $120 billion of financial obligation monthly. And the worse it gets, the more dollars the Fed is going to print in a vain attempt to hold the system together. It’s going to toss people who are just holding on off-balance.
So far, the large bulk of the trillions of dollars that the US government/Fed has actually developed have entered into the financial markets. It’s expanded stock, bond, and home costs, making rich individuals even richer. The circumstance is still under control.
However it’s going to begin filtering down to a retail level.
Here’s an example I experienced just today: As a lifelong car guy, I follow the costs of exotic cars and trucks. I saw a 1968 Porsche 911R soon to be auctioned– a low mintage automobile, but absolutely nothing remarkable in my opinion. Simply a light-weight 911 with only a 220-horsepower engine. It’s approximated to trade hands for $5.5 million. That’s insane.
There’s been a growing bubble in exotic automobiles for many years, and now it’s cresting. The amusing part is that the listing said, “Maybe it’s time for you to take your payouts from GameStop and purchase this Porsche.” I don’t understand if the author was being sarcastic or major, however his words pretty well frame today’s state of mind.
It’s quite surreal. I’ll bet, nevertheless, that within ten years, there will be numerous exotics, now being purchased as instant collectibles, that will be found in barns with blowouts, dead batteries, and birds roosting under the hood. Their owners will have lost both their money and their interest in collecting. No one will want to be seen driving them for fear of being outed as a rich person– which isn’t great during a depression. The same thing occurred to Cables, V-16 Cadillacs, and Duesenbergs during the last anxiety
Here’s the bottom line … I think you can plan your life around financial turmoil over the next couple of years.
International Man: In a misdirected effort to deal with quickly increasing rates, could the United States government enforce rate controls and wage controls? What are the ramifications?
Doug Casey: At this point, the United States government can doing almost anything. Keep in mind that the prime directive of all living entities– whether an amoeba, an individual, or a federal government– is to make it through. They’ll do that at any expense. The federal government isn’t “We the People;” that’s fictional. It’s a discreet entity with a life of its own. Worse, it’s a parasite. It produces absolutely nothing but just resides on its subjects.
With an expected new injection of $3 to $5 trillion into the marketplace on top of all the other money that has been produced in the last few years, plus a large drop in production due to the fact that of COVID hysteria and lockdowns, at some time, prices will absolutely blow up across the board.
Of course, people will then clamor for the federal government to “do something”– not understanding that the federal government is the reason for all of this.
But the question is: Are they foolish sufficient to try wage and cost controls?
When it was tried under Nixon in 1971, he created a financial catastrophe. But neither the government nor individuals found out anything from it. They blamed high gas prices and gas scarcities on greedy oil companies. They blamed high beef prices on evil ranchers. Politicians think that because they now have much more control over the economy that perhaps manages will work this time. I would not put it past them to impose wage and rate controls, and foreign exchange controls also. Rate controls, likely integrated with some form of Guaranteed Yearly Income, will absolutely affect the supply of goods and services because it will make the production of some things uneconomic. This will inevitability produce scarcities.
We have not seen anything yet.
International Man: The Argentine government as soon as disallowed the publication of independent inflation statistics. Under the guise of combating so-called “false information,” could the United States federal government do the same?
Doug Casey: It’s almost as if the United States federal government is taking lessons from the Argentine federal government.
Today it appears that the US is just about one cycle behind Argentina. And it’s not just economic details that is selectively reported and distorted– the problem is much broader than that.
I rely on the United States government’s figures just slightly more than those of the Argentine federal government. The problem is that Argentina is a backwater, whereas the whole world revolves around Washington, DC. The issue is that the people presently in control of DC are Bolshevik-style ideologues, similar in nature to the Peronists and Kirchnerites in Buenos Aires. They’ll do to the United States exactly what’s occurred to Argentina.
The biggest example of bogus reporting is in COVID-19. The US federal government hasn’t made it illegal yet, per se, to state things that run counter to the official story on COVID-19. However it’s minions, Facebook and Google, that have actually made it practically difficult to get other info out.
As a result, we do not understand what’s truly happening with the so-called pandemic. Medical professionals are actively dissuaded from even discussing treatments for the disease. The only palliative available are vaccines, which for the most part are unneeded, appear to be inadequate, and quite perhaps threaten. However, in the lack of precise data– whatever is absolutely politicized– all we have is unanswered questions. One concern I have is “Where are all the carts whose drivers call ‘Bring out your dead’ as they go through the streets every morning?”
International Man: What other second- and third-order impacts of out-of-control inflation do you anticipate?
Doug Casey: There are lots of them, and they’re severe. First, inflation eliminates the cost savings of the average guy.
We need to bear in mind that the average American– if he saves any money at all– saves in the type of US dollars. If those dollars are pumped up, it’s going to impoverish many millions of Americans on the low end of the economic scale.
If inflation goes much higher, particularly in an environment of synthetically low or suppressed rate of interest, no one is going to save dollars for the same factor Argentines don’t save pesos. People will rather redouble their consumption, acting increasingly more like absurd insects and less and less like prudent ants. The outcome will be a scarcity of capital. Lots of currency, but no capital, will gradually transform the US into Argentina or Venezuela. Development will reduce. Technology, which resides on capital, will decrease. Among other things, it will result in chaotic markets.
Because individuals don’t comprehend that the federal government is the reason for the inflation, they’ll demand more government intervention and preparation. Over the last couple of generations, they’ve concerned think about the federal government as a magic cornucopia.
Political mayhem will accompany the economic mayhem. Then we simply have to wait for a strong male to come along who’ll say, “Look, things run out control. You require me to get them back into control.”
I do not see any way out of a down spiral at this moment.
International Man: What are the financial investment implications?
Doug Casey: In this financial and political environment, “investing” is a bad option. Investing can be compared to the planting of a seed in order to grow an ear of corn. It requires proper conditions in order to be successful. Investing capital requires certain minimums of stability and predictability. Those will be in brief supply, in addition to many other good things. Markets will be fluctuating extremely, like an elevator with an at the controls. That prevents financiers.
Speculators, on the other hand, want to prosper in turmoil. They don’t attempt to grow companies; they simply benefit from politically caused distortions in the market. That’s why they have a bad reputation. But it’s an undeserved credibility given that they’re just reallocating capital in the face of turmoil– which is required and salubrious. In a stable free enterprise, speculators would be largely jobless– but sadly, that’s not the world we reside in.
You’re going to have to learn to speculate. In the extremely politicized environment we’re dealing with, there will be plenty of purely mental panics to the downside and manias to the upside too.
The next couple of years will have a great deal of bad news for almost everyone, sprinkled with some excellent news for a couple of.
The bad news is that in an increasingly inflationary, heavily taxed, greatly regulated society such as ours, the basic standard of living will decline. One has to end up being a speculator out of self-defense. Just remember that the public will aim to blame speculators– not federal government– for their issues in the future, much as they have blamed oil and cattle manufacturers in the past.
Editor’s Note: The economic trajectory is bothering. Sadly, there’s little any person can practically do to alter the course of these trends in movement.
The best you can and need to do is to remain informed so that you can safeguard yourself in the best way possible, and even benefit from the scenario.
That’s precisely why bestselling author Doug Casey and his coworkers simply released an urgent new PDF report that describes what might come next and what you can do about it.