“The superiority of the gold standard consists in the fact that the value of gold develops independent of political actions.”
– Ludwig von Mises
August 23, 2024 – “Watching this performance,” writes Marshall about the Democratic National Convention, “It’s powerful acting… on behalf of a parade of lies. Enough already. I wish I had some sleep aids.”
Katie Herzog, covering it for the Free Press, summed it up this way:
“After four days of nonstop Democratic Party boosterism, I’d been so inundated with the message that Kamala Harris is the most qualified candidate to ever run for president, one who will usher in a new era of prosperity, that by the time she took Doug’s hand and retired backstage for a drink and a smoke, I almost, for a second, believed it.
But then I remembered that politics is theater, that Joe Biden stepped down only because Nancy Pelosi held a gun to his head (and would have pulled the trigger), and that Harris was cast in this role not because the people choose her, but because Biden needed a brown woman to appease activists and then his brain turned to mush. A month ago, the only thing left of the KHive was four gay guys in P-Town snorting Adderall off a wicker coffee table; now it’s half the country! Whoever scripted this deserves an Oscar.”
While the actors were performing at the DNC was going on, one of the “lies” came to a befuddling end yesterday.
Yesterday, the Bureau of Labor statistics admitted they had overstated the number of jobs created over the last year. With a simple correction to a spreadsheet, 818,000 jobs simply disappeared from the government’s statistical database.
The announcement marked the second-largest downward revision in the BLS’ history.
The largest?
Back in 2009, when the economy was still reeling from the burst housing bubble and talking heads continued to claim there were “green shoots” in our heavily astroturfed economy.
But it gets worse.
Depending on how you do the math, the number rises to 1.08 million jobs to the negative.
“What’s happening here?” is not a question investors should be having when the jobs report comes out.
But, it gets even worse. The writers at Zero Hedge recounted the bumbling incompetent way the numbers were release at all, right here : Wall Street Outraged Over Latest Epic F*ck Up By Biden’s Labor Department.
It’s hard to describe what a mess the BLS has created over the past several years.
I tried. To my wife… for about 20 minutes, walking around a Walmart looking for extra hand towels, a new rug and poster stickers for our daughter’s new dorm room.
“Yeah, yeah,” she said in the voice that also says ‘I hear words coming out of your mouth, but I’m not really listening.’
After finding a tower of batteries, strangely by itself behind an aisle of entertainment magazines, she turned to me so abruptly, she stopped me mid-sentence.
“Fine, I get it.” she said after a pregnant moment. “What does any of that have to do with our own money?”
Then she went back to comparing prices of Energizer and Duracell AAA multipacks.
But that’s really the point, isn’t it?
If you follow the financial media at all, you know there’s an entire cottage industry devoted to parsing every word of the Fed minutes when they come out… and legions of analysts who try to kinetically mind-meld with Jerome Powell whenever he gives a press conference.
Since the Fed began its highly public battle with inflation, the Fed’s reaction to each and every jobs report has launched a million pens of artful speculation.
At its essence, a slowing jobs report, let alone a bad one, would impugn the Fed to cut rates sooner rather than later.
But what about all those press conferences and PR campaigns designed to tell us we shouldn’t believe our own eyes and our own experiences and just trust them “the economy is fine, better than ever?”
So, with the Bureau of Labor Statistics admitting that hasn’t been true all along… what’s next?
Harris, for one, will claim she knew nothing about it, and that her economic policies are going to “fix” the broken economy, over which she vice-presided. The media will no doubt lap that misegas up.
Will the Fed cut rates?
On Wednesday, the Federal Reserve’s meeting minutes indicated a majority of voters were in favor to cut rates in September.
Today at the central bankers annual golf junket to Jackson Hole, Wyoming, Jerome Powell maintained his usual aloofness regarding the BLS snafu(s). But also confirmed what the market had priced in months ago.
“The time has come for policy to adjust,” says Powell, the rate cut cycle will start in September.
Game on!
What do rate cuts mean? To start, the “everything” bubble will avoid the pin, for now.
As longtime friend and Bonner Private Research strategist Tom Dyson wrote this week:
“…We’ve hedged our cash with big positions in gold, silver, platinum, shipping and energy stocks, and these have done very well. We’ve also been earning 5.5% interest on our cash, which has compensated us for some of our lost purchasing power. But it’s looking like this interest rate may not be above 5% for much longer…”
And that’s the real shift. After a few years of getting a meaningful return on risk-free cash holdings, those returns are ending.
At least, I can tell my wife in two sentences what the Fed’s latest moves mean for our money: We’ll get a lower return on our dollars. And the dollar will continue to devalue over time.
Gold, as an asset class unto itself, loves all this political chicanery. This morning, it briefly bounced off another all-time high:
Having already risen $460 year-to-date.
How high can gold go now that it’s topped $2,500 the first time? Our long-standing forecast has been in the ~ $3,200 range. James Hickman writing at Schiff Sovereign makes the case a Harris presidency will drive the price much higher, below. Enjoy ~~ Addison
Kamala Is Going to Drive Gold to $10,000
James Hickman, Schiff Sovereign
Gold recently hit $2,500 marking an all time record high.
The reality is, there’s a very good case to be made that gold is still quite cheap compared to its trajectory. It’s possible that in a few years, $2,500 gold could look remarkably inexpensive.
Not to be overly dramatic, but Kamala Harris is a big reason why.
I’m not a D or R kind of guy, but it’s impossible to ignore the impact of the upcoming election on the future of the US.
At a press conference a few weeks ago, reporters asked Jerome Powell, the Chairman of the Federal Reserve, about the upcoming Presidential election and whether or not the Fed was modeling any potential policy changes depending on the outcome.
But the Fed Chairman was almost proud of the fact that the election outcome didn’t factor into their planning at all.
The Fed considers itself apolitical. Powell seemed to think it was somehow wholesome and responsible to completely ignore perhaps the single most important factor that could drive the economy in the coming years—the outcome of the Presidential election.
Two people with diametrically opposed views will clearly make a massive difference on the economy.
I saw a report yesterday that, since she stole the nomination exactly one month ago, Kamala has raised $500 million. That brings her total campaign war chest to a massive $1 billion.
It’s funny because I seem to remember Rep. AOC saying that, “No one ever makes a billion dollars. You take a billion dollars.” In this case, I’m inclined to agree with AOC.
Kamala took a half billion from Biden— the legitimate nominee— and raised another half billion by making the most outrageous claims and lying her ass off, without even bothering to sit for basic interviews or take legitimate questions.
She’s been coronated without scrutiny, and only now are we starting to see how she views the economy.
She seems to understand that a lot of people are suffering, and she at least partially diagnoses it accurately as the result of inflation. But she has no understanding of where the inflation comes from.
There’s no discussion of the government’s role in running multi-trillion dollar deficits, the unprecedented fiscal and monetary stimulus, and continuing to rack up trillions of dollars in debt every year, even though there’s no longer a national emergency.
Her plans will undoubtedly cause higher deficits and more inflation. For example, subsidizing housing is obviously only going to make everything cost more.
Giving new home buyers a free $25,000 just means houses will become $25,000 more expensive.
It’s exactly what happened during the pandemic when they started handing out stimmy checks— there was no increase in goods and services, just more money floating around, so prices went up.
The same thing will happen with housing and everything else the government pours “free money” into. But they have no understanding of this.
None of that factors into her thinking. To her, inflation is always and everywhere the result of corporate greed.
And her solutions to inflation involve essentially criminalizing “greed” and throwing the full force and weight of the federal government into attacking the private business sector.
Now she’s talking about using the government and the legal system to go after private businesses. She’s attacking grocery store chains, accusing them of being greedy when their profit margins are a measly 2-3%. Apparently, that’s greedy.
The Biden Administration has gone out of its way to destroy competition, even though competition is one of the most important factors in keeping prices low.
They attack oil companies and prevent the expansion of US energy production. Of course that makes energy prices higher, which in turn makes the price of everything else higher.
This is why it’s ultimately very difficult to see the dollar surviving as the global reserve currency through a single term of a Kamala administration. Her policies will create higher deficits, balloon the national debt, and drive up inflation.
The nature of a good reserve currency is stability. Foreign governments and institutions require stability in the reserve currency. Countries around the world are desperate for something they can actually rely on—something that won’t be inflated away or subject to a gargantuan national debt.
Another key element of a reserve currency is strength. Someone who backs pro-Hamas protesters is anything but strong.
This is why gold is reaching all-time highs.
Yes, some of it is investor speculation. But the biggest driver of gold prices is central bank demand, and they’ve been buying literal tonnes of gold.
To me, this is a clear and obvious sign that they are preparing for an end of the dollar as the dominant global reserve currency.
Gold is a likely and very reasonable reserve asset for them to hold in lieu of dollars, because it has a 5,000-year history of maintaining its value. Central bankers know that they can trade gold for other currencies or strategic assets, and it is this sentiment that is driving their gold purchases.
In short, central banks around the world are trading dollars for gold.
If Kamala wins, that trend will almost certainly continue, resulting in the eventual end of the dollar as global reserve currency.
And I’d expect the price of gold to go a lot higher from there. ~~ James Hickman, Schiff Sovereign
So it goes,
Addison Wiggin,
Grey Swan
