Nowhere To Go but Down?

The only currency that will experience deflation is Gold. (James Turk to Ian Gordon)

I haven’t talked much lately about my concerns about deflation. I used to mention Ian Gordon and his Kondratieff cycle work often, which I believed had a great deal of merit, at least as long as the global monetary system was based on gold. And I recall one time several years ago in Vancouver when I was walking next to both James Turk and Ian Gordon; James told Ian, “The only currency that will experience deflation is Gold.” In other words, no matter what happens, gold will be the only currency that will buy more in the future.

Over the past two weeks, my Inflation/Deflation Index (pictured in dollars, not gold) has suddenly turned downward, touching, and then bouncing off the five-year moving average. Could it be that the Fed will trigger another major collapse by continuing to raise interest rates even though the U.S. and indeed global economies continue to remain in a depression? Yes, I know, the official word is that the global economy has been growing. But if you believe that, I have a bridge in Brooklyn to sell you. 

Chris Hamilton will be on my radio show this-coming Tuesday to talk about the real reasons the Fed is raising rates in light of such a poor U.S. and global economy. While the Fed has said it would remain “data dependent” it is clearly not paying any attention to lackluster statistics. It obviously has an unannounced agenda that has little to do with the economy. That is no surprise when you consider the Fed’s sole function is to protect its shareholders, namely, the major commercial banks, which of course also now function as investment banks as well.

And what could be more destructive to the bankers than if the light were shined on their counterfeit currency manipulation? In fact the very survival of the ruling elite depends on their Mafioso-like behavior in creating counterfeit money out of thin air while convincing the vast majority of the populace to accept it as valuable tender. A loss of confidence in the dollar’s legitimacy would be the death knell of the ruling elite, save those who own honest, intrinsically valuable money, like silver or gold. Thus, the false credibility of a legitimate, intrinsically valuable currency must be maintained at all costs! The sacrifice of a productive manufacturing base and a middle class must be destroyed to save the ruling elite parasites.

I believe one of Chris Hamilton’s charts, displayed on your left, says much about why rates are rising even as the economy continues to suck wind. Foreign buyers of U.S. debt are disappearing as are social security funds (IG), leaving “domestic” purchase of U.S. Treasuries. As Chris pointed out in an April 5 article, more than half of that 87% “domestic” purchase is simply labeled by the Treasury as “other.” Who is this mystery buyer? Who else could it be but those with institutions owning an immoral license to rob the middle class rather than a central bank? But alas, the entire world will eventually notice that the emperor is naked if money is created to infinity, driving the ruling elite’s stock market there too. The only way to save the dollar would be to allow interest rates to rise, even if that means a depression far greater than that of the 1930s. After all, the elite must do us a favor and survive for our own good even if it kills half the middle class and impoverishes the rest of us! Whether that means a deflationary or inflationary depression is one of several questions I expect to ask Chris Hamilton on my web-based radio show on July 11. Listen here at 3:00 New York time or listen the following day here:

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.