The Greatest Crackup the World’s Ever Known

By now, anyone with half an inkling of curiosity about why prices and values don’t add up has traced the divide back to the money itself.  It’s not hard to see.

Asset prices, like houses and the major stock market indexes, have lost all visible connection with the underlying economy.  However, wage growth has stagnated; over the last 40 years low level wages have only increased by $0.32 per hour in real inflation adjusted terms.  Stocks and residential real estate, at the same time, have gone to the moon.

Even with the NASDAQ’s 11.2 percent decline from its all-time closing high set on November 19, the index is still up over 110 percent from its March 2020 low.  What will it take for the NASDAQ to crash back to earth?

Something else that has gone to the moon is government debt.  In 1980, the national debt was $908 billion.  Today it’s over $29.8 trillion.  That’s an increase of over 3,181 percent.  Over this time, however, gross domestic product (GDP) has only increased 632 percent – from $2.86 trillion to $20.94 trillion.

Of course, these are merely the facts and figures.  The effects to countless Americans are hard to measure.  But, by and large, the last 40 years have been a great disappointment for the American worker – and an absolute boon for the political elites.

In addition to asset prices and government debt, social discontent has also gone to the moon.  Here in the LA Basin, for example, some of America’s most resourceful fellows have taken to emulating the corruption found in Washington and on Wall Street.  They’re looting stores and plundering freight trains as a matter of business.  Daring professions like these flourish when hard work and playing by the rules no longer pays.

What’s really going on…

Spineless Money

To begin, the nation, in nearly every aspect, is failing.  Such is the fate of nations who adopt spineless money.  More specifically, as 20th century currency analyst Franz Pick observed:

“The fate of the nation and the fate of the currency are one and the same.”

We’ve seen that spineless money is synonymous with spineless nations.  Nero’s Rome.  Revolutionary France.  Weimar Germany.  1980s Argentina.  Zimbabwe.  You name it…

Once a country’s economy and finances have been corrupted by fiat the fate of the nation is doom and disaster.

Yet it didn’t have to be this way.  A balanced budget.  Stable currency.  Limited government.  Industrious populace.  Personal responsibility.  Rule of law.  Commonsense.  These, and similar sensibilities, would have prevented all the wild moonshots.

Instead, we got lies, corruption, teachers unions, arbitrary rules, monster debt, Anthony Fauci, fake money, woke, and a dependent populace.  Abhorrence like these, again, go back to the money…

Management of a spineless currency by central planners always falls to frequent debauchery…followed by short episodic periods of crushing austerity.  The central planners never seem to get it right.  Their extreme intervention lurches the economy from boom to bust.

Now they’ve done it again…

In advance of the Federal Reserve’s forthcoming rate hikes, the yield on the 10-Year Treasury note eclipsed 1.8 percent.  This is the highest its been since January 2020 – two months before the federal government declared a national emergency on coronavirus.

At the same time, the 2020 and 2021 fiscal year deficits, which covered much of the coronavirus period, were a combined $5.9 trillion.  Much of this was financed via printing press money from the Federal Reserve.

The Greatest Crackup the World’s Ever Known

Should it be any surprise that consumer prices, as measured by the consumer price index (CPI), are increasing at an annualized rate of 7.0 percent – or over 15 percent when using 1980s calculation methods?

More importantly, do you really think hiking the federal funds rate 50 basis points is going to cut it?

This may cause a tantrum on Wall Street, but it won’t do much to control raging consumer price inflation…

Let’s be clear, consumer price inflation has nothing to do with rising prices or greedy corporations.  But it has everything to do with declining money.  This can’t be said enough.  When the quantity of money goes up, the value of each money unit goes down.

The systematic destruction of the dollar has been compounding for over 107 years; since the passage of the Federal Reserve Act in 1913.  And it has been going on in earnest since President Richard Nixon closed the gold window in 1971.

But that’s not all that has been going on…

The plundering, corruption, and lies of public officials are criminal.  Federal Reserve Presidents have been buying and selling stocks to front run their market swinging policy decisions for years.  Members of Congress have long been trading off insider information related to their legislative wheeling and dealing.

Indeed, the fate of the nation and the fate of the currency are one and the same.  We’re headed for complete financial, moral, and political collapse.  But it’s not all bad…

You can count your blessings.  You have front row seats for the greatest crackup the world’s ever known.  The dollar’s doomed.  The nation is too.

…and the rush to silver and gold has only just begun.

[Editor’s note: This sucker’s going down.  Right now, in real time.  It’s happening.  And it ain’t pretty.  Moreover, your wealth and lifesavings are at extreme risk.  A traditional 60/40 stock to bond split will not provide the diversification needed to safely ride this out. There are, however, remarkably profitable opportunities to exploit the crackup and build geometric wealth.  At the Wealth Prism Letter that’s our aim.  Take a look, and join our burgeoning club of subscribers today!]

Sincerely,

MN Gordon
for Economic Prism

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