Credit Creation Has Run Off a Cliff

The markets through the first four days of this week have been a total risk on as you can see from our Key Market Metrics shown below. But as this was being written, the mainstream fiat currency fraudsters who run our world are smashing gold down in the futures markets once more while equities are once again roaring higher. So we shall see how this work ends up.

What I can tell you is that through the first 4 days of this week, my IDW has hit a brand new all time high at 189.86. That’s up from 187.91 four days earlier. Clearly the FED is juicing the money supply which is all they can do to prolong the life of this economy for another few days. But clearly the U.S. economy requires a constant respirator to retain life and breath.

Richard Duncan pointed out today that the economy is in big trouble because the U.S. economy runs on credit and credit creation has run off a cliff. From an inflation-adjusted 9.3% during Q4 2020 to 6.9% during Q1 2021, and a mere 0.9% during Q2 2021, Richard says that to avoid recession the U.S. economy needs a minimum of 2.0% inflation-adjusted growth. Meantime Larry Summers stated yesterday, “We now have a gathering storm of inflation. We’re likely to see a combination of that storm coming to fruition … I think there are very serious reasons for concern.”

Having lived as a young man during the 1970s, I recall how much anxiety double-digit inflation combined with massive bankruptcies and unemployment caused.  What people don’t realize is that when 1970s inflation was factored into stock prices, the Dow Jones Industrial average lost more than it lost during the Great Depression of the 1930s. But the 70s look like a tempest in a teapot compared to what is coming. And unlike the 1970s there is no way to cure this disease, namely that a return to truthful monetary and economic policies can be applied. To tame inflation that was heading toward hyperinflation, Fed Chairman Paul Volker stopped printing money and allowed interest rates to rise dramatically to levels that recognized the true price of capital. That paved the way for decades of prosperity. But now the mere mention of a 3% or 4% rise in the long bond causes stocks to the precipice of a stock market crash. So rather than obeying the laws of economics, whether a Republican or Democrat dwells in the White House, the outcome will be the same. Print the country into a hyperinflationary disaster! What is the answer? Aside from a faith in God and his promises to us through his son Jesus Christ, I can’t offer much earthly help other than to advise you to stay out of debt, own physical gold, silver, and other real assets, as the foundation of your wealth, and be sure to foster good friendships. When mainstream people like Richard Duncan and Larry Summers express the level of concern they are expressing, you know we are in trouble.

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.