The Miles Franklin Newsletter
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Gary Christenson-Contributing Writer For Miles Franklin
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Who’ll Stop the Rain?
Miles Franklin
sponsored this article by Gary Christenson. The opinions are his and are not investment advice.
From John Fogerty:
“Long as I remember,
The rain been comin’ down,
Clouds of mystery pourin’
Confusion on the ground.
Good men through the ages
Tryin’ to find the sun.
And I wonder,
Still I wonder
Who’ll stop the rain.”
The Rain that’s coming down… not gonna stop…
We’re not talking about liquid water that condenses from clouds and nourishes plants.
Instead, it’s a deluge of:
- Central bank digital printing of currency units.
- Growth in national debt.
- Newly unemployed workers.
- Crushing corporate, governmental, and individual debts.
- Bankruptcies.
- Lost revenues and closed businesses.
- Wall Street and Hedge Fund bailouts.
- Helicopter “money.”
- Repo Madness.
- Political nonsense in an election year.
Yup, the falling rain of fiscal, monetary, and political nonsense has turned into a deluge. It will get better and then worse. Coming are a second wave, a respite, and then a third wave.
What else should we expect in an election year with a deeply polarized electorate? Add the power struggle between the “Deep State” and those who seek change. Stir in resentment against the political and financial elite. Mix with a devastating COVID-19 shutdown. Agitate the combination.
Address with the same failed remedies:
- Lower interest rates.
- Create $ trillions to bail out Wall Street.
- Monetize Treasuries for government spending.
- Send checks to individuals. Helicopter money.
- Close businesses, travel, much of the economy, personal services, retail, medical services, and eliminate millions of jobs.
- Hope for a vaccine even though virus vaccines have a spotty record. However, they are profitable for Big Pharma.
Rain is pouring down. Expect:
- Massive debt will be used to “fix” an unpayable debt problem. Oops!
- Low interest rates conceal risk and hide the true cost of borrowing.
- Bailouts for Wall Street and individuals.
- Bankruptcies, skyrocketing unemployment, late payments, defaulted loans. Recession/depression.
- Many businesses and jobs gone forever. Oops!
- A “Newer Normal” that will be painful for years.
- Blame the virus.
SPECIFICALLY:
Central Bank Printing
: The Fed added over $3 trillion to its balance sheet in a few months. They bailed out Wall Street and the US government.
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For perspective, that newly printed $3 trillion is twelve times the value of the gold supposedly vaulted in Fort Knox.
The Fed can create digital dollars, but not gold.
The future actions of the Fed are obvious—they will create boatloads of digital dollars. Chairman Powell confirmed that the Fed will do whatever is necessary.
National Debt:
September 30, 2000 $5.67 trillion
September 30, 2010 $13.56 trillion
January 1, 2020 $23.17 trillion
May 22, 2020 $25.47 trillion
National debt increase in less than five months: $2.3 trillion
. The House passed another bailout bill for $3 trillion. It is an election year. Name three senators who are worried about the national debt. Right! A version of that bill is likely to pass. More bailout dollars and expanded debt are inevitable.
UNEMPLOYED WORKERS:
Over 38 million Americans have filed for unemployment in the last two months. The real number of unemployed is higher. Expect bailouts and more “Helicopter Money.”
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CRUSHING DEBTS:
Many Americans did not pay rent in April or May. The same is true for mortgage payments, credit cards and auto loans.
Expect bailouts to funnel dollars to individuals so they can feed the Debt Monster.
BANKRUPTCIES, LOST REVENUES AND CLOSED BUSINESSES:
Several retail giants have declared bankruptcies. Many small businesses have closed forever. Some will survive, others will fail in the “second wave” regardless of how many digital dollars the Fed prints. The Fed can’t print prosperity.
WALL STREET BAILOUTS AND REPO MADNESS
:
Wall Street on Parade
said, “
By March 14, the Fed had pumped out more than $9 trillion in revolving repo loans to the trading houses on Wall Street…”
The Fed worries about big banks and hedge funds. Small businesses and individuals cause minimal concerns in the Eccles Building.
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HELICOPTER MONEY
: The CARES act authorized $300 billion for individuals. A possible next step is a UBI—Universal Basic Income for most adult Americans. A UBI will aid the lower 90% so they can feed the Debt Monster.
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POLITICAL NONSENSE
: If we can make the other candidate look bad, it helps our candidate. Truth, honesty, and integrity play minimal roles in Presidential elections.
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THINGS TO CONSIDER:
“There is NO POSSIBLE way to restore the economy. We are NOT putting Humpty Dumpty back together again.”
“There is NO AMOUNT of stimulus that will prevent an economic contraction into 2022.”
“The U.S. economy is now in a death spiral.”
“More than one-fifth of Americans said they had little or no confidence in their ability to pay the next month’s rent or mortgage on time.”
“The next problem is a crisis in the banks, wholly unexpected by investors and depositors. At a time when lending risk is soaring off the charts, their financial condition is more fragile than before the Lehman crisis.”
“… central bankers … will be encouraged to double down on monetary inflation, principally to support financial markets.”
David Schectman
: “DOW 40,000 Would Solve All Our Problems”
“Based on the total collapse of the economy (that is not subjective) and the Federal Reserve’s response, to create trillions of dollars (that is not subjective) that has taken place in the last three months, the odds of the trends [gold and silver moving up] continuing are very strong.”
“You cannot grow an economy by printing money… I honestly don’t know if there is a solution. I’ll be optimistic and hope so.”
“What few realize is that the Deep State or Powers That Be are going to lose control totally. They are totally dependent on the world in which they can control everything through debt and the fake monetary system they have created. But let me make it clear that this fake system is about to implode.”
“… the world is starting to discover that paper money cannot survive when central banks are printing it to death.”
“In the past 8 weeks, central banks have been buying $2.4 billion per hour of financial assets.”
How do you think this will end?
“Reform is impossible, given the incentives, regulations, and vested interests whose sole purpose is to, in clay Shirky’s insightful phrase, ‘preserve the problem to which they are the solution.’”
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CONCLUSIONS:
- The “rain” of Fed created digital dollars will continue. No politician or central banker will stop the “rain.”
- Those new dollars levitate stocks and enable the government to spend trillions on bailouts.
- The increased currency in circulation is huge compared to the value of gold supposedly stored in Fort Knox. Gold is priced far too low.
- The inevitable result will be consumer price inflation. An initial jolt of asset deflation is likely.
- Many businesses and jobs are gone forever. Bailouts may help in the near-term, but don’t expect the economy to replace those bankrupt businesses and lost jobs. Bailouts will NOT replace production or ongoing revenues.
- The gold to silver ratio has fallen from over 125 to about 100 in the past two months. That ratio should fall further as silver prices rise more rapidly than gold.
- Gold prices bottomed in December 2015 at $1,051. Gold sells for over $1,700 (May 2020) in US dollars, and at all-time highs in most other currencies. Higher prices are inevitable for several years.
Miles Franklin
will exchange digital currency units for real money—gold and silver bars and coins. Central banks are inflating, governments are spending, it is an election year, and the legislature is in session. Beware of central banks, governments, elections, and our legislature.
Buy silver. Buy gold.
Gary Christenson
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About Miles Franklin
Miles Franklin was founded in January, 1990 by David MILES Schectman. David's son, Andy Schectman, our CEO, joined Miles Franklin in 1991. Miles Franklin's primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry. In November, 2000, we decided to de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle. Our timing and our new direction proved to be the right thing to do.
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