A Natural Move Back to Real Money is Underway

The western world is nearing the end of a capitalist system that has created enormous wealth thanks to the false religion of Keynesian Economics. In my recent Vancouver talk, I demonstrated that under the current global monetary system America and the West in general have taken on so much debt that economic growth is now starting to slow down dramatically from its potential, as demonstrated on the chart on your right.  The quick version of the dirty lie told by John Maynard Keynes was that you can consume more than you produce and get rich doing it.  Actually, that did prove to be true for the con artists that sold the lie, as well as politicians, the military industrial complex and the bankers that took advantage of it. But not for the average hard-working citizens of America, or citizens of any nation under the sun, at least over the longer term…

With the U.S. debt/GDP at around 130%, American policy makers have no politically viable option but to print so much money that it guarantees to send the U.S. dollar to the dustbin of history. Yes, that is hugely bullish for gold and silver. But it will shake up our lives beyond anything any of us alive have experienced to date. We are now seeing that the U.S. financial system can’t take a 3% 10-year treasury rate without causing the next housing or equity market bubble implosion. The banks in the West are all using highly overvalued financial assets as collateral rather than wealth-producing tangible assets. As the hot air is left out of these financial assets, we can expect a major international banking crisis to develop, assuming central banks allow that to happen. If they do, you can count with 100% certainty that this will be followed by the next QE program.

Meanwhile, the Chinese and Russians appear to have a much better understanding of the West’s cancer-riddled financial and economic system than our own policy makers have. The Chinese and Russians have been massively building up their gold reserves so that when the West’s monetary and economic system implodes, they can revert to the most stable monetary system ever known to man, namely a gold-backed system. In the past couple of days, former Russian President Dmitry Medvedev talked about how the West is self-destructing by its economic and geopolitical policies. He predicted an end to an American-centric world order. Indeed, the handwriting is one the wall!  This morning I read that at least 20-European gas buyers have opened “rubles-for-gas” accounts with Gazprombank as Russia requires from European nations that wish to buy life-sustaining Russian gas. This of course is in response to American-led financial and logistic sanctions launched against Russia for the invasion of the Ukraine. Not being able to trade, Russia had no choice but to require rubles or gold to ensure its own survival. In so doing, Russia, supported by China, is teaching the Keynesians that you can’t produce wealth from printing presses. I believe this is hugely bullish for gold as well as gold shares. Stay tuned!

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.