In recent years, many have wondered why prices and values seem so disconnected. It’s apparent that the answer lies in the money itself. This disconnection is becoming increasingly visible.
Asset prices, including real estate and key stock market indices, have strayed far from reflecting the actual economy. Wage growth has been sluggish at best; over the last 40 years, real wages have seen a mere $0.32 per hour increase when adjusted for inflation. In stark contrast, stocks and home prices have skyrocketed.
Although the NASDAQ has experienced an 11.2 percent drop from its all-time closing high on November 19, it still boasts a staggering 110 percent increase since its lows in March 2020. A pressing question remains: what will it take for the NASDAQ to revert to more sensible levels?
Moreover, government debt has reached alarming heights. In 1980, the national debt stood at $908 billion; today, it has ballooned to over $29.8 trillion—an astonishing increase of more than 3,181 percent. In comparison, the gross domestic product (GDP) has only risen by 632 percent, from $2.86 trillion to $20.94 trillion.
These statistics convey just part of the picture—the real effects on countless Americans are more challenging to quantify. However, it’s clear that the past four decades have largely disappointed American workers while benefiting political elites.
Equally concerning is the rise in social unrest. In the Los Angeles area, resourceful individuals have begun mimicking the corruption that pervades Washington and Wall Street. They have resorted to looting stores and plundering freight trains as a means of sustenance. Such desperate acts thrive when hard work and ethical behavior yield little reward.
The Decline of Sound Money
The nation is faltering in nearly all respects, and this trend often follows the adoption of weak currency. As 20th-century currency analyst Franz Pick wisely stated:
“The fate of the nation and the fate of the currency are one and the same.”
History has shown that weak currency is tied to weak nations, as seen in places like Nero’s Rome, Revolutionary France, Weimar Germany, 1980s Argentina, and Zimbabwe. When a nation’s economy and finances are tainted by fiat currency, disaster tends to follow.
Yet, things could have taken a different path. A balanced budget, stable currency, limited government, a diligent populace, personal accountability, rule of law, and sound judgment would have mitigated these outrageous financial peaks. Instead, we find ourselves mired in deception, corruption, overreaching regulations, insurmountable debt, and a disillusioned populace—once more, all roads lead back to the money.
The management of a feeble currency by central planners inevitably leads to cycles of debauchery and subsequent periods of harsh austerity. They rarely seem to strike the right balance, continually pushing the economy from boom to bust.
And they’ve done it once again…
As anticipation builds for the Federal Reserve’s impending rate hikes, the yield on the 10-Year Treasury note has surpassed 1.8 percent, the highest level since January 2020, just before the pandemic struck.
At the same time, the deficits for the fiscal years 2020 and 2021, largely influenced by spending during the pandemic, totaled a staggering $5.9 trillion, much of which was financed through money printing by the Federal Reserve.
The Greatest Crackup the World’s Ever Known
Is it any wonder that consumer prices, as represented by the consumer price index (CPI), are climbing at an annualized rate of 7.0 percent—or over 15 percent using the inflation calculation methods from the 1980s?
Do you genuinely believe that a 50 basis point hike in the federal funds rate will suffice to remedy this situation?
While it may cause market tremors, it won’t effectively tame rampant consumer price inflation.
Let’s clarify this: consumer price inflation is not merely a result of rising prices or corporate greed. Rather, it stems from the depreciation of money itself. This fact cannot be emphasized enough: as the money supply increases, each unit of currency loses value.
The gradual dismantling of the dollar has been in progress for over 107 years, starting with the Federal Reserve Act of 1913. This trend accelerated in earnest when President Richard Nixon severed the dollar’s link to gold in 1971.
But this is not the entirety of the story…
The systemic theft and dishonesty by public officials are alarming. Federal Reserve Presidents have engaged in stock trading to anticipate their influence on market movements for years. Members of Congress have long exploited insider information to benefit their personal financial interests.
Clearly, the destiny of the nation and the fate of its currency are intertwined. We are on a perilous path toward financial, moral, and political collapse. Yet, not all is bleak…
Consider this: you are witnessing firsthand the greatest disruption the world has ever seen. The dollar is facing its demise, and so is the nation.
And the momentum toward silver and gold has only just begun.
[Editor’s note: The situation is unfolding rapidly as we speak. It is happening, and it is far from pretty. More importantly, your wealth and savings are at significant risk. A traditional 60/40 stock-to-bond allocation will provide insufficient protection to weather this storm. However, remarkable opportunities exist to capitalize on this upheaval and build substantial wealth. At the Wealth Prism Letter, we aim to guide you. Explore our insights and consider joining our growing community of subscribers today!]
Sincerely,
MN Gordon
for Economic Prism
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