Corona is a Great Scapegoat for the Financial Meltdown but What’s the Real Reason?
Gold recently rallied above its all-time high. Bitcoin also ran higher, can both these rare assets keep going up for a while?
Everyone in the mainstream media is using the corona virus pandemic as the reason the financial system is so screwed. But this is not the case. Yes, Governments and central banks are printing trillions in new currency but that’s a failed attempt to delay the upcoming mess.
At the end of the day, the FED, the ECB and other central banks have been doing everything they can to steal money from savers for years.
This is done through inflation. The FED, in particular, is working hard to totally destroy the dollar and even rob the US of its reserve status.
But gold and bitcoin bugs have been hedging against the coming collapse for years. The Pandemic is only speeding everything up.
A Trillion Dollars of Debt
For instance, it took the US 200 years to print it’s first trillion dollars of debt. To put that into comparison the FED managed to print 3 trillion in the first quarter of 2020!
So what do you think will happen to the value of these paper coupons? Naturally, they lose value faster and faster.
You can not have every single stock pumping and record unemployment without total.
Governments and central banks have dealt with the pandemic by printing trillions of Dollars, Euros and Pounds. All in the hope to hold up the stock markets and bail out bank debts.
More Bank Bailouts
Yes, that’s right, bail out banks. How? The stimulus checks that Americans received were all sent to banks. If you had debt there, the banks would automatically pay that off before handing you the money. So it was a hidden bailout.
At this stage, i don’t think there is anything central banks for governments can do to stop gold from reflecting the inflation and going up in price.
If I look back at golds first modern rally in the ’70s, the price went from $33 to around $800! Paul Volker (the FED chairman at the time) had a policy of getting out of the way and allow the price of the currency (the interest rate) to cost whatever the market was willing to pay. This stopped the gold bull market and led us into a 20-year gold bear market. Although this wasn’t good for the gold bugs it was the right thing to do, let the market decide prices.
The second modern gold rally was after the .com bubble burst in 2011 and ended at around $1900. So what held that bull in its tracks?
The Fed convinced Americans that quantitative easing (money printing) would not end in hyperinflation. The mainstream believed that it was just a temporary measure and that after the fed would have normalized the interest rates, reduced the debt to below 2008 levels. This is a massive lie but everyone believed them. Even though there has not been one historical example that endless money printing doesn’t end in the complete destruction of savings and the economy as a whole.
So the FED didn’t have to raise interest rates to stop the 2008’s gold rally. They simply had to lie to everyone by promising to raise rates like they did post dot-com.
We all know how this ended, the fed never allowed the markets to control interest rates, and they never stopped QE. In fact, they openly call for QE infinity. This is because people have lost any outrage, they have been “saved” so many times and have no financial education anymore that they let the FED do what they want, with impunity.
In late 2018 when the FED finally tried to slowly raise rates the entire stock market started to crash so the fed forced interest rate cut after interest rate cut. This gave everyone the illusion that all is well. People and the media simply look at economic indicators like the stock market going up to decide whether the economy is in good shape or not. This is the trick, manipulate the indicators because hardly anyone looks at the fundamentals.
United States vs the World
But this is the USA, what about the rest of the world? Well, they just followed suit. They all started to print debt and offer it up at super-low interest rates. It’s a good old fashioned race to the bottom. With the rest of the world also pumping money out. This is what’s holding the dollar up for now. The reason this was good for the US is that this new currency flying around would invest and buy debt from the USA.
The world is now seeing the cracks, and it’s all getting blamed on COVID19.
We now have another bull run on gold which started all the way back in 2015 at around $1,000 per Toz.
So the question is, what’s the FED going to do to stop this current gold bull run and why the hell would they want to stop a gold rally anyway?
Well, I don’t believe there is much they can do. They can’t raise rates without destroying the stock market. They can’t even pretend that they will eventually raise rates because people have already been lied to about that.
Gold may finally find it’s real market price. This is dangerous for the central banks as people will start to see how global currencies are being devalued against the traditional store of value. Why would you want to hold fiat? Its value is being whittled away and then you must hold it in an account with tiny or even negative interest rates.
The best bet is to simply hold gold and for the tech-minded some bitcoin. This is what people will start doing. Everything else would be insanity.
The only thing governments can do is blame Corona Virus and say as soon as we have a vaccine the economy will return. I call Bullshit.
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