John Rubino – There Is An Economic Game Of Chicken Going On, And The Fed Is Determined Not To Blink
John Rubino, Founder of the Dollar Collapse website and editor of a recently launched newsletter over at Substack, joins us to review some of the macroeconomic trends in motion as it relates to the strength of the underlying economy, corporations, and individuals in the new higher interest rate environment. We discuss possible scenarios that could play out once the Fed pauses their rate hiking cycle, but they along with all other companies and families must still deal with the interest service payments on much higher amounts of debt. If we see a recession or extended contraction worsen due to this backdrop, then it could be the tipping point to bring in more accommodative action from the central banks, without fixing the real issues.
In that kind of a scenario, John feels gold, silver, and the precious metals mining stock will benefit to a larger degree than many other sectors will. We wrap up by getting John’s reaction to the recent news about Nemont Mining (NEM) putting in a bid to acquire Newcrest Mining (NCM.AX), and what it may mean for further mergers and acquisitions in the PM stocks.
Hi Larry. The bottom line takeaway I get from that article is something we’ve been saying on here for years…. That inflation is caused by excessive amounts of new money supply. We saw it first hit asset prices like homes and the stock market, and then consumer prices for everything under the sun. While they blamed everyone under the sun (the pandemic, too much demand, supply chain issues, war in Ukraine, etc…) those were only contributing factors and the real boogeyman is too much new money supply.
This passage aptly summed up the predicament the Fed was in and remains in:
“Central banks know that inflation is a monetary phenomenon and that is why they are hiking rates and tightening as fast as governments allow them. However, central banks have lost a significant amount of an already low credibility by first ignoring the inflation risk and later using the base effect and transitory excuse, only to react late and slowly.”
The article then goes on to point out that they are going to (once again) change how they report CPI and the internal metrics to disguise the decrease in the purchasing power of the US Dollar. Dollar strength relative to other currencies is what is actually transitory, and somewhat meaningless in the overall scheme of things. What is actually important is what that Dollar buys, and inflation continually erodes the only strength that actually matters — purchasing power.
The final point is that if the current system of independent and diversified monetary transfer, is co-opted and centralize to just digital currencies that the central bank would issue and have total control over, that it would allow more digital money to be created and thus spike inflation (and the erosion of purchasing power) even further.
Ok…really appreciate the translations both EX and Matthew…i agree…This CB digital counterfeiting is far worse than simply incrementally destroying the value of a real currency….More derivative and less real…Right, more inflationary….The system is desperate no doubt…..larry
Central bank counterfeiting, currency (not money) creation, causes price inflation which ultimately causes a loss of confidence in the currency, the system and the pseudo authorities who make the rules. That loss of confidence in particular is what throws the switch to transition from high inflation to hyperinflation. The two couldn’t be more different in character psychologically and economically. In a hyperinflation the currency becomes a hot potato that no one wants to hold for long. Currency revulsion among the majority of the population is not a feature of the kind of inflation we’ve experienced our whole lives or even lately. The introduction of CB digital currency just might destroy the currency through lost confidence alone before trillions more currency units are created/transferred/stolen arbitrarily. We can hope.
Newmont launches $24.45b takeover bid for Newcrest
Tom Parker – 02/05/2023
“Newcrest Mining has confirmed it has received an indicative proposal from Newmont Corporation regarding the latter’s $24.45 billion full acquisition of the Aussie gold miner. The conditional, non-binding offer would see Newcrest shareholders receive 0.38 Newmont shares for each Newcrest share.”
The real issue for The Federal Reserve is how long can they keep Humpty Dumpty (the bloated debt- based economy) together, before The Stock Market crashes and The Central Banks start defaulting. DT
Agreed, and I’m starting to doubt that all the kings horses and all the Fed’s banksters are going to be able to put the Humpty Dumpty economy back together again this time if things really devolve into a deep recession and if Humpty breaks.
As long as they KEEP THE SHEEPLE STUPID……………
FAKE FED………. some sheeple are really slow….
John does a good job explaining the longer term mechanics of the market (Powell’s promise of Pain) as interest rate changes affect the wallet and Psychology of people ………..as the stagflation term will no doubt be tossed around big in the next downturn, some of the Uber-growth crowd finding the party is over just may pile into bed with the PM crowd to try escape high inflation chomping on their buying power………maybe a classic repeat of the 70’s.
Nice pull back, profit taking and consolidation in gold………….needs to hold the 1805 level above the 18 month moving average, for gold to maintain the upward (bullish) bias on the monthly chart ?……..I think I got this from Doc !
Bears have to defend the triple top at 2000 with their lives………against the stagflation bull stampede that’s coming ! Let’s see if they can………………..
Good comments LarryC, and we’ve already been in a stagnant growth, high inflation, and high energy prices type of stagflation for over a year now. While we have seen a nice relief rally over the last few months in most asset classes, the “buy-the-dip” growth stock fanatics may get spanked if this all rolls over and then heads even lower throughout this year.
I knew after that jobs report on Friday that the economy had no chance of being fixed or turned around, now it is just a waiting game. The economic system has proved itself too complex, today’s technology is too powerful to continue on unbridled. The financiers can no longer diagnose the problems of the country’s business or how to solve the country’s finances. DT
One lie begets another …. Next thing you know you have intervention in markets and the “single chart” for all sectors. Oh I forgot …computers and algos give liquidity. The Easter Bunny brings Jelly Beans.
The state of the union address shall clarify everything! Hunky dory America floating on neon red ballons
Bill Gates has donated 250 million $+ to media outlets so that the world can hear “truth”
Powell Interview 11:30
State of Delusion Speech……… BIDEN……
Exited TFPM -too much VOL – 10% gain
Hi Marty. We just interviewed the CEO Shaun with Triple Flag this morning and will be posting that interview later today, so at least check out the update on their royalty assets when that goes up. Cheers!
Hello Sheeple………. you might want to watch this one….
Have moved half of my uranium investment to things like Magna, Nevada King, Snowline and Surge Battery which make more sense to me. Have called Computer Repairman as green color keeps showing up on my account screen. Didn’t know what it was at first but research said it was good. Don’t know but very strange color.
The Hedgless Horseman would be proud of some of those portfolio allocation choices. 🙂
It’s good to have support when things seem the darkest. The only new one is Nevada King and I noticed HH and Crescat involvement. I was going to add more to Snowline and split the buy. Let’s hope they don’t walk everything back again today. Normally it is a build to red. Today might be a take down of green. In any event, even though there is more green today, capping is quite evident. What the heck. If you can’t bite their legs off, might as well tolerate it a little longer. Not much longer though….
Huge H&S top in SLV:GLD. We are currently right on the neckline today and waiting for triggering.
If the formation get triggered, it projects down to (more or less) a retest of the September ’22 low.
GDXJ:SPY filled its Feb. 3 gap down this morning as it ran into Bollinger band and price pivot resistance before falling back near its low for the day but it still looks good (“good” meaning GDXJ is a buy vs SPY).
The miners and the stock market both fell back to their earlier lows but only the miners (GDXJ and SILJ) refused to make new lows while stocks (SPY and QQQ) did make new lows.
GDXJ:SPY 60 minute:
Appears somewhat engulfing or at least yellow.
The pullback in the miners of the last 1-2 weeks did nothing so far to hurt the bullish case. The picture is clear and simple…
I expect nothing but net (green) the rest of the week.
The 60 minute GDX:SPY chart above didn’t turn out so here it is again:
Green for the day but still red for the week. However, if things turn in my range bound account, this would be a higher low, narrowing the range. I will take it and see how tomorrow goes before leaving the shelter.
anyone bottom line or translate this article?…would be welcomed….a big thanks in advance if it occurs…glta………https://www.zerohedge.com/crypto/central-bank-digital-currencies-would-bring-hyperinflation