As you know, I very rarely write articles anymore – unless something speaks to me, as VERY important. To wit, my last two were an unsolicited endorsement of the CASA wallet – given my strong view that in the coming months, Bitcoin SECURITY will be of optimum importance; and a strong warning, the eve of Wall Street Bets’ attempted silver short squeeze, that it would miserably fail.
Today, I am writing about what could be, TOMORROW, the culmination of 19 years of proselytizing strong money - given my long-standing view that ultimately, history’s largest, most destructive fiat Ponzi scheme (the “dollar standard,” which started when Nixon abandoned the gold standard in 1971) would inevitably fail.
For nearly two decades, the first 15 years of which I held gold and silver miners (2002-11) and bullion (2011-17), I watched the Central banks - plus “partners in crime” in government and major banks – dilute the market (shares and bullion) with derivatives, and suppress gold and silver prices to mask the inflationary message relentless money printing would bring; and since 2016-17, in Bitcoin.
During that time, Central banks mastered money printing, market manipulation, and propaganda – to the point that an entire generation of money managers believed there was no inflation, despite seeing it each day; and that CBs could control it if necessary. So much so, they no longer researched fundamentals; but learned, simply, to “follow (and front-run) the Fed.”
The problem being, that like all Ponzi schemes, it needed to continue growing to be maintained; in its latter stages, exponentially; whilst simultaneously, accompanying it with increasingly flimsy propaganda. This, in a world where the ill effects were becoming increasingly more obvious – like inflation, debt accumulation, economic stagnation, wealthy disparity, and disbelief in increasingly comical economic data.
This game MUST inevitably end, but in the absence of Bitcoin, it may well have survived significantly longer than sound money advocates like myself could believe. However, BTC’s parabolic rise; and subsequently, virally spreading institutional adoption; is making it impossible for the inflation issue to be hidden.
Consequently, at a time when debt is exploding across all aspects of the economy – and money printing going parabolic, amidst plunging economic activity; rates have started to surge…which, in such a massively leveraged environment, is the equivalent of a financial bullet to the world’s head.
For decades (PARTICULARLY since the financial system BROKE in 2008), the Fed would meet all crises with more money printing, market manipulation, and propaganda – which assuaged investor fears, yielding higher stock, bond, and alternative asset prices (but not gold and silver, which were suppressed – and destroyed permanently, when Bitcoin was born).
However, that changed on March 4th – when Fed Chairman Jay Powell miscalculated the market by believing that, at a highly anticipated media interview, he could get away with “Fedspeak” when asked tough questions about rising rates, weak economic activity, and rising inflation. In other words, he thought he could pretend to be not worried about anything, and non-committal about action when the market clearly demanded it.
Watch Jerome Powell at WSJ Jobs Summit
Consequently, rates surged further, threatening to blow up not just the bond market – where tens of trillions of dollars are saved; but the stock and real estate markets, too…and oh yeah, the entire economy.
In the ensuing two weeks, rates have held near their highs, but markets calmed due to, in my view, the typical lethargy they have been lulled into by years of market manipulation. However, with Biden’s unfunded $1.9 trillion “stimulus” bill passed, at a time when inflation is surging, economic activity weakening, and rates remaining at their highs; no less, as foreign Treasury holders are starting to aggressively sell, whilst Treasury Secretary Yellen assures all Federal spending will be monetized; rates have again started rising – taking out the post-Powell highs as I write…one day before perhaps the most impactful FOMC decision EVER.
Yes, tomorrow at 2:00 PM EST, Powell will be forced to not only make a policy decision (increase QE, do nothing, jawbone about further changes, suggest possible NIRP, etc); and I assure you, the market will NOT accept further Fedspeak. Thus, the Gordian Knot the Fed started tying in 1971 will be front and center for the entire world to see – as he will be FORCED to admit inflation is a problem, or be seen as the liar he is.
If the FOMC can manage to assuage the market again – and thus, cause stock and bond prices to rise anew – it will be perhaps the greatest con game ever…though ultimately, sooner rather than later, it will fantastically fail.
Andy Hoffman on Twitter: "T-1 day to the FOMC meeting, and rates still haven't come down yet. If still at current levels, Powell will be forced to act (or STRONGLY jawbone) to (TRY TO) lower rates - as if he tries another Fedspeak conference, like last week, the markets will implode. #BITCOIN https://t.co/6jnTTx0nZs" / Twitter
Either way, it is clear Precious Metals are no longer monetary asets, as Bitcoin has CLEARLY taken the mantle as the go-to store of value – which is why now, more than ever, the case for HODLing has NEVER been stronger.
As for the rest of the market, it is unclear if stocks will surge or plunge due to inflation fears – but what I do know is, the 40-year, 100% artificial bond market rally could turn into an epic, economy killing rout…whilst all remaining confidence in fiat currencies, and the Central banks that print them, could be coming to an epic, catastrophic end.