Gold Is Doing Its Job

On Monday, the U.S. Commerce Department announced it was awarding Taiwan Semiconductor Manufacturing Company (TSMC) a $6.6 billion CHIPS Act subsidy for the fabrication of computer microchips in Phoenix, Arizona.  TSMC will also receive up to $5 billion in low-cost government loans.

In return, TSMC will expand its planned investment from $40 billion to $65 billion and add a third Arizona fabrication site by 2030.  The company will be producing the world’s most advanced 2 nanometer technology at its second site starting in 2028.

The Commerce Department anticipates the development will create 6,000 long term manufacturing jobs and 20,000 shorter term construction jobs.  With the AI arms race rapidly escalating, having semiconductor fabrication on American soil may be a strategic necessity.  Nonetheless, subsidizing industry – in this case a foreign company – using American taxpayer dollars comes with lasting costs.

This is but one of countless examples of how the U.S. economy no longer functions through the free and mutual exchange of individual citizens in the marketplace.  It is subject to extreme intervention from planners in the government.

These planners include members of Congress.  And they pass ridiculous spending bills that condemn the American populace to a lifetime of debt servitude.  Crony contracts.  Pork barrel waste.  Manufacturing subsidies.  Social transfer payments.  These costs all pile up on the national debt ledger.

The recent $1.2 trillion spending bill, for example, is over 1,000 pages.  It includes massive giveaways for various departments such as Defense, Homeland Security, Labor, Health and Human Services, Education, and State.

Are these departments really spending this money for the greater good?

Not Capitalism

The effect of all this government spending twists the economy in strange and unnatural ways.  Money is extracted from people and businesses who earned it by delivering goods and services of value.  Then, it is pumped into agencies and departments, and government contractors, who otherwise would be incapable of standing on their own two feet.

To be clear, this economic system has nothing to do with capitalism.  Rather, it’s a centrally planned economy that feeds off the fruits of capitalism, while trampling upon individual freedom and personal liberty.

Call it cronyism.  Call it fascism.  Call it tyranny.  Call it whatever you want.  But don’t confuse any unpleasantness you’re currently experiencing with the failure of free market capitalism.

Mega government spending bills have nothing to do with free market capitalism.  And they have everything to do with rising consumer prices.  But that’s not the half of it.

While your Congressional representatives are busy handing out money like breath mints, there’s a whole other beast of central planners that are devouring people’s labors and extracting value for the benefit of member banks.  Here we’re referring to the Federal Reserve System – the central banking system of the U.S.

This cartel provides big banks with an astonishing benefit.  When the economy expands, the bankers earn substantial profits.  But when the economy contracts, often the consequences of reckless lending by bankers, the Fed bails them out with credit created out of thin air.  This has the effect of transferring the losses to the public.

The U.S. government has added $29 trillion in new debt since 2000.  How was all this debt made possible?  How was it financed at such ultra-low interest rates?

In short, this was all made possible by the expansion of the Fed’s balance sheet.

Currency Debasement

Still, there are no free lunches.  And even in a fiat money system, where new money and credits are issued with just a few strokes of the keyboard, there are limitations.

The coronavirus fiasco’s mega money printing saturnalia blew consumer price inflation out to 40-year highs in mid-2022.  And prices have continued to rise from there.  Moreover, the consequences are making life extraordinarily disagreeable for vast numbers of people.

This week’s CPI report showed consumer prices increased 0.4 percent in March and 3.5 percent over the last 12 months.  This 3.5 percent annual CPI increase reported in March is 75 percent higher than the Fed’s arbitrary 2 percent inflation target.

Nonetheless, looking back just one year gives an incomplete picture of rising consumer prices.  Remember, the 3.5 percent increase over the past 12 months is compounded on top of prior years.  Thus, to better understand the rampant level of currency debasement you’ve been subjected to it is appropriate to look back several years.

The world changed dramatically in March 2020 when the government shut down the economy and started sending out stimmy checks.  We all lived through it.  And we continue to experience the fallout.  So, let’s look back accordingly.

Since March 2020, at the onset of the coronavirus madness, the CPI has increased from 258.115 to 312.332.  That’s an increase of 21 percent.  Has your income kept pace with inflation over the last four years?

If the answer is no, you didn’t do anything wrong.  You’re merely suffering the consequences of central planners who are hellbent on destroying the currency.  By implication, you’re worse off than you were four years ago.

What’s more, the figures above are all courtesy of the Bureau of Labor Statistics.  Thus, they’re understated to conceal the government’s failings.  By our estimation, over the last four years, consumer prices have inflated by about double – 40 percent – from what the BLS reports.

Gold Is Doing Its Job

The rapid rise in consumer prices is a consequence of the Fed’s and the Treasury’s joint money printing operations.  In other words, rising consumer prices are an expression of too much artificial stimulation.  What’s more, the entire economic and financial edifice depends on it.  Take it away, and it collapses.

Central bankers, like Fed Chair Jerome Powell, understand that they have only two options.  Continue stimulating until the dollar loses all value and society breaks down into disorder and disarray.  Or stop simulating and cause a complete credit collapse and 1930s-style depression.

Neither scenario is very appealing.  But, as you’re likely aware, the choice has already been made.  The Fed will continue inflating and debasing the dollar, with the hope of managing a slow burn into the ultimate hyperinflationary collapse.

With a little luck, the Fed will be able to put this off for a few more years.  The goal is to postpone the day of reckoning until significant hoards of baby boomers have vacated the planet.  Then, the younger generations will be left to pick up the pieces.

In the interim, chaos is already boiling over in many areas.  High consumer prices.  Unsustainable debt burdens.  Widening income and wealth inequality.  Mass urban homeless encampments.  Border chaos.

These are all characteristics of an economy with terrible fiscal and monetary policies and significant corruption and fraud.  But you don’t have to be a victim.

Physical gold – and silver – has provided wealth protection in times of chaos for thousands of years.  No doubt, it will provide this important service as the consequences of decades of currency debasement and corruption catch up with America.

Year-to-date gold is up over 15 percent in dollar terms.  Over this same time, silver is up about 20 percent.

Indeed, gold and silver are doing their job.  Was there ever a doubt they wouldn’t?

[Editor’s note: It really is amazing how just a few simple contrary decisions can lead to life-changing wealth.  And right now, at this very moment, I’m preparing to make a contrary decision once again.  >> And I’d like to show you how you can too.]

Sincerely,

MN Gordon
for Economic Prism

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2 Responses to Gold Is Doing Its Job

  1. Forearmed says:

    Apparently, we have voted into office a bunch of morally and ethically corrupt idiots, who could care less about how our economy is supposed to work, as long as they have kept their constituents happy, so they’ll vote the idiot back into office.

    Greed has finally turned our once Great Country into a Third World Hell Hole, with no money to pay off our debt that keeps increasing because they have no idea about Fiscal Responsibility. This is exactly why countries end up in Civil War !!!

  2. Paul M says:

    I started buying gold and silver in November of 1992, the very day Bill Clinton defeated Ross Perot in the 1992 election. I concluded that the growth of the federal debt CANNOT be stopped. It’s more than the electorate voting themselves money out of the public treasury via a compliant congress. Money enters our economy via debt issuance, both from the central and the local banks. Once the gold chaperon was removed August 15, 1971, the federal debt’s been growing exponentially (doubling) every 10 years. CBDC’s will give the Fed cartel more control over us, but attempts to stop the debt machine will crash the banking system; it must run its course. Much of the world is preparing, such as BRICS+ banks buying gold and eschewing US treasuries. The mainstream media is a mouthpiece for the lies generated in Washington. Prepare yourselves as the empire declines.

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