Will There Be a New Independence Day?

No doubt whatsoever! This week was a risk off week with stocks getting decimated especially on Thursday. Of course, by now we know the entire market is basically a fraud perpetrated by the Fed and government in general. Nor do rioting youth have any desire to see a return to a free market. They seem to rather like the chaos that exists in the financial system except they would rather be the thugs at the Fed that are redistributing income to their friends rather than allowing the establishment to engage in legalized theft.

And since they don’t have that right they have taken to the streets and have even claimed a piece 

of downtown Seattle as their own country, which they have named CHAZ (“Capitol Hill Autonomous Zone”).  Is there really any reason to celebrate the 4th of July any longer? Soon enough if passive Americans stand aside there will be a new Independence Day. As far as management of our financial system is concerned, I’m not sure how much worse they might do than those who have been in charge all along, especially since 1971, which was the date gold was detached from money, allowing our legalized thugs to redistribute income from those who produce it—the miners, manufactures, farmers, and inventors—to the parasites in Washington and their partners in crime on Wall Street. With the demolition of our currency beginning in 1971, the American dream has slowly been destroyed.

The chart above from CNBC tells it all. When gold was detached from the dollar, it enabled the Military Industrial Complex and all other major government related activities to siphon off wealth from middle class Americans who produced things of need in America and around the world. Money being “free,” credit cards were handed out to Americans to buy cheap Japanese and then Chinese goods. As long as net export nations continued to buy our Treasuries from export earnings, the game could go on. But that game is now over. America is now in the position of facing a national insolvency. Even Stephan Roach now believes the end of the dollar as the world’s reserve currency is in sight. If so, how can America avoid becoming impoverished? Clearly the removal of gold from our currency in 1971 by Nixon, who declared “we are all Keynesians now,” was the great inflection point of our national economic demise.

Obviously gold and gold shares and other tangibles become increasingly attractive in this kind of environment. In this risk off week, gold and Treasuries were positive, though commodities were hit pretty hard in general. It is interesting though that copper was relatively strong, which leads me to point out the chart from Danielle DiMartino Booth on your left that shows the copper/gold ratio (green bars) and the 10-Year Treasury yield. Danielle points out that the copper and gold futures markets through 2021 are with a 0.84 correlation pointing toward an increase in the 10 Yr. Treasury rate to 1.3%. But with endless trillions of stimulus to be deficit funded, sooner rather than later the Fed may have to start printing massive amounts of money just to enable payment of interest. This we will be watching closely.

About Jay Taylor