Silver Sunrise: Is A Bright Future Possible?

Before moLet us look at the macroeconomic picture and see what is going on! I state what is happening because the mainstream press, especially the financial press, perpetuates misinformation constantly mixed with some truth. Unfortunately, most investors and professionals buy into a false narrative.

The first fallacy is the so-called “Goldilocks economy.” The Bank for International Settlements (BIS), often called the “Bankers Bank,” wrote a paper a few years ago about the Goldilocks economy but warned about the three bears.
 

“Papa Bear” equaled Inflation. Historically, Inflation comes from high wage growth in a tight labour market during the late stages of the business cycle – a relationship economists describe as the Phillips Curve. The Phillips curve has been proven to be a weak concept. The problem is how much lying exists in the monetary system. There may also be slack in the labour market that is not fully reported. Part-time workers comprise about a third of the U.S. workforce, and many want to transition to full-time jobs.
 

More broadly, the spread of e-commerce has been eroding the monopolistic pricing power of traditional retailers and wholesalers of goods and services – the so-called “Amazon Effect.” Inflation will return when tightening cyclical factors outweigh the structural disinflationary forces. And the U.S. could be the first country to show signs of a turnaround in inflation. At this time the consensus is that the Fed will NOT adjust interest rates.
 

“Mama Bear” – from the BIS paper dealt with protectionism. Although the BIS felt this was highly unlikely, we disagree. Protectionism occurs for several reasons, the greatest being war and the second being scarcity. In the ongoing globalisation, the political class continues to move toward their new world order, which means global governance and, eventually, a one-world currency. The problem the elites have is that the world is moving to nationalism and protecting the physical assets any given country possesses. For example, less food is being exported because of the disruption of war, and yields are down in many areas due to changing conditions.
 

PROTECTIONISM AND INSTABILITY

Many countries are looking at their natural resources and rethinking the relationship between their assets and the NAFTA agreement for example. The idea of the BRICS nations banding together could be considered a protectionist idea because these countries have a loose agreement to help each other and, most notably, are not U.S. dollar-dependent.
 

There were populist backlashes against globalisation, the Brexit referendum in the U.K., and presidential elections in the U.S., Argentina, and other nations. The U.S. pulled out of the Trans-Pacific Partnership (TPP) and has threatened to leave NAFTA. The U.S manufacturing sector has been shrinking for decades. The number of manufacturing jobs has been declining since 2000 when it was 17 million, and has since continued to decline. Between 2000 and 2010, the manufacturing sector experienced a decline of 34% in manufacturing jobs or more than 5.8 million jobs. 
 

Protectionism can harm the global economy because it reaches the flow of capital and technology. This is becoming a fact as some of China’s most prominent U.S. corporations are “onshoring,” which means leaving China or significantly reducing production in China and returning to manufacturing in the United States. Again, this is “anti-globalism.” The risk remains that more countries will place trade and investment barriers with trading partners. A protectionist spiral will derail growth well into the future, and Wall Street ignores this fact is recognised by Main Street.
 

The “Baby Bear” scenario outlined in the BIS paper was focused on financial instability. A financial crisis is one way the entire global system is challenged in every aspect. This was witnessed in 2008, and the world was much closer to the economic system freezing up than most people know. We also saw what happens when a global scare causes significant disruptions. When the CV-19 arose in earnest in March 2020, the stock markets around the world sold off massively. This was a sharp and brief sell-off as the working group on financial markets quickly pushed liquidity into the stock market and brought the indexes back up so that “corporate America” would not suffer. At the same time, small businesses globally were devastated, with many going out of business and never returning.
 

The risk of financial instability is growing daily. This is mainly due to the build-up of leverage over decades, which has accelerated dramatically over the past three years. We have been watching the instability build over the years and expected repercussions some time ago. It seems logical that there is not much more time left until the next crisis arrives. Market historians say there’s an everything bubble across stocks, crypto, and housing — and it will burst spectacularly in 2024. Harry Dent says a bubble spanning stocks, housing, and crypto will burst soon.
 

BANK FAILURES AND LIQUIDITY CRISIS

Dramatic collapses made 2023 the biggest year ever for bank failures. Before Silicon Valley Bank collapsed in March, it had been 28 months since a U.S. bank failed — the longest stretch without a failure in more than 15 years. SVB’s unexpected demise kicked off a historic year for bank failures. Bank failures will continue and accelerate this year. It could be argued that this is deliberate to consolidate the money power into just a few huge banks and make it much easier to control the depositors.  
 

What the banks, corporations, and individuals are facing is a liquidity crisis. A liquidity crisis occurs when a company can no longer finance its current liabilities from its available cash. For example, it can no longer pay its bills on time and defaults on payments.
 

Roughly 10% of companies in the U.S. are considered ‘zombie firms’ according to a Federal Reserve estimate published in 2021. Again, this is a liquidity crisis as firms sustain their businesses by taking on more debt than they can repay. Economists call them zombie companies. These companies distort markets, keeping resources from their fundamentally sound competitors.
 

Economists argue that such policies preserve inefficiencies while stifling productivity, growth, and innovation. This is the major trend and well beyond a problem at this point. It almost guarantees something close to a collapse scenario.
 

The Federal Reserve cannot continue to raise interest rates much further because the economy is contracting, but that is not a concern of the Fed, although they pretend it is a concern. The real issue is a contraction in the M2 money supply, which spells deflation and depression. Bankers fear this more than anything, and history is explicit. When faced with a hard decision to keep the system’s integrity or inflate away the currency’s value, the bankers choose to print currency until the market refuses to accept it.
 

Knowing this is the case, the Central Bank must devise a solution that involves a “new” system. It is generally thought that the Fed will issue a CBDC, but the Fed must get this approved through Congress. I doubt whether the FED would even adhere to this stipulation, but it is far more likely that the new system would be run through commercial banks. The Fed could sterilise the massive debt by placing the current deficit into 100-year no-yield bonds and adjusting the Treasury’s Balance sheet where the interest on the debt is practically zero.
 

SILVER IS A POWERFUL SOLUTION

This could greatly incentivise the public to favour the new digital system. I recently interviewed David Rogers Webb, author ofThe Great Taking, and he presents the case where investors in stocks and bonds are only beneficial owners. If a real crisis hits, the banks are the legal owners of the collateral (your property).
 

Is it time to get back to the original intent of honest money? The ownership theory of money. What you HOLD has value and is NOT incumbent on a bank, broker, dealer, or third party. To perform day-to-day transactions in the marketplace with gold and silver coins is impractical. In other words, it is impractical in today’s world. However, it can be achieved easily by warehousing the metal at a depository and placing the value in a smart contract with availability on your phone.
 

There is no need to laugh; some states in the United States are proposing just such an idea. Imagine if people exited the money powers, opted-in for money, and transacted directly without anyone in the middle? The most powerful way to assert power to the people is with silver because the bankers do not hold it as a monetary reserve. Since silver is the most vital element known to humanity outside of oil, those who own the silver can make the “rules.” Perhaps this writer is overly optimistic yet holding real money in times of universal deceit is revolutionary.   EG