Socialism rejects human action and economic calculation and sells a false image of a government that can create wealth at will by issuing more units of fiat currency. Obviously, when inflation arrives, the socialist government will use its two favorite tools: propaganda and repression. Propaganda, which accuses stores and businesses of driving up prices, and repression, which occurs when social unrest intensifies and citizens legitimately hold governments accountable for scarcity and high prices, are the two main strategies.

If you want lower prices, you need to give less economic power to the government, not more. Only free markets, competition, and open economies help decrease consumer prices. Many readers might think that we currently have a free market with competitive and open economies, but the reality is that we live in increasingly intervened and overregulated nations where central banks and governments work to perpetuate unsustainable public deficits and debt. Therefore, they continue to print more money, leading many to question why it is getting harder for families to make ends meet, buy a home, or for small businesses to prosper. The government is slowly eating away the currency it issues. They call it “social use of money.”

What is “social use of money”? In essence, it means abandoning one of the main characteristics of money, the reserve of value, to give the government preferential access to credit to finance its commitments. Therefore, the state can announce larger entitlement programs and increase the size of the public sector relative to the economy, creating a self-fulfilling prophecy. The state issues more currency, which makes people’s money less valuable. Citizens become more dependent on the state, and they will demand more subsidies paid in the currency the state issues. It is, in essence, a process of control through debt and currency depreciation.

When governments and central banks talk about price stability, it means a two percent annual depreciation of the currency. Aggregate prices rising an average of two percent is hardly price stability because it is measured by the consumer price index, which is a carefully crafted basket of goods and services weighted by the same people who print the money. That is why governments love CPI as a measure of inflation. It fails to fully reflect the erosion of the currency’s purchasing power. This is why the CPI’s basket calculation fluctuates so frequently. Even if it accurately measures, it will underestimate the rise in prices of non-replaceable goods and services by adding them to a basket of things we consume maybe once or twice a year at best. When you put together shelter, food, health, and energy with technology and entertainment, there will always be distortions.

Thus, governments and central banks are never going to defend price stability. If aggregate prices fell, competition soared, and citizens saw their real wages rise and their deposit savings increase in real value, their jobs would disappear.

When a central bank like the Fed cuts rates and increases the money supply after an accumulated 20.4% inflation in four years, it is not defending price stability; it is defending price increases. This strategy serves to conceal the government’s financial insolvency. A currency with a declining value.

Governments are the ones that create inflation by spending a currency that is constantly losing purchasing power because the state issues more than what the private sector demands. No corporation or allegedly evil oil producer can make aggregate prices rise and continue increasing annually at a lower pace. Only the one that prints the money, and central banks don’t print money because they want to; they increase the money supply to absorb rising public deficit spending.

Inflation is a hidden tax, a slow process of nationalization of the economy, and the perfect way to increase taxes without angering voters and blaming private businesses in the meantime. The consumer will likely blame the store or business for higher prices, not the issuer of a currency that loses purchasing power.

Why would governments want higher prices? Because it gives them more power. Destroying the currency they issue is a perfect form of control. That is why they need more debt and higher taxes. High taxes are not a tool to reduce debt, but rather to justify rising public indebtedness.

You may have read numerous times that the government has unlimited borrowing power and can manage inflation to allow you to live comfortably. It is false. The government cannot issue all the debt it wants. It has an inflationary, economic, and fiscal limit.

Inflation is a warning sign of declining currency confidence and a loss of purchasing power. The economic limit is evidenced by lower growth, lower employment, weaker real wages, secular stagnation, and declining foreign demand for public debt.

The fiscal limit is evidenced by soaring interest expenses even with low rates, weaker receipts every time they hike taxes, and citizens and businesses leaving the country to more friendly tax systems, all of which add to the poor or negative multiplier effect of government spending.

If you want lower prices, you should give less economic power to governments, not more.

A government that tells you it will borrow $2 trillion per annum in a growth and record receipt economy and will continue to increase debt and borrow well into 2033 with the most optimistic assumptions of GDP and receipt is telling you it will make you poorer.

When a politician promises that he or she will cut prices, they are always lying. A weaker currency is a tool to increase government power in the economy. By the time you find out, it may be too late.

Money is credit, and government debt is fiat currency. Currency depreciation is inflation, and inflation is equivalent to an implicit default. No interventionist government or central bank wants lower prices because inflation allows the government to increase its power while slowly breaching its monetary commitments.

Gold’s ascent toward $3000 an ounce was interrupted last month when China’s central bank halted its purchases. However, a survey of 70 central banks conducted by the World Gold Council (WGC) indicates robust future buying. None of the respondents foresee a decline in central bank purchases, with 81% anticipating an increase.

“China broke its 18-month gold-buying streak in part to basically ‘pump the brakes’ because prices have been skyrocketing,” said Jonathan Rose, CEO of Genesis Gold Group. “But more importantly they were testing resilience and control to see if their actions would cause prices to plummet, which they didn’t.”

Central banks significantly influence gold prices, with last year’s purchases nearing record levels. Despite private investors selling off in Q1, May saw a reversal, with ETF holdings rising.

Private buyers might bolster prices further, particularly if U.S. interest rates fall. The WGC survey revealed a strong expectation of increased gold reserves in central banks over the next five years. The motivations include strategic rebalancing, economic concerns, and geopolitical instability.

“We often disagree with the way central banks acts, but their motivations are aligned with our customers right now,” Rose said. “The central banks are hedging their investments because they are worried about turmoil tanking economies. Our customers feel the same concerns which is why they’re rolling over or transferring their retirements to physical precious metals.”

Genesis Gold Group specializes in taking old or current retirement accounts and moving them into Genesis Gold IRAs. This “safe haven” approach is becoming more popular as financial strife spikes across the country and around the globe.

The difference between individual investors and central banks as it pertains to gold is that with central banks, they have some degree of control over prices. As they push for Central Bank Digital Currencies, all eyes are on the U.S. Dollar and moves being made by BRICS nations. These factors suggest central banks will continue to play a crucial role in the gold market amidst ongoing global tensions and economic challenges.

Request the free, definitive gold guide from Genesis Gold Group today.

We must begin by clarifying the question. It is true that inflation is slowly decreasing, but we cannot say that it is under control. Let us remember that the latest CPI data in the United States was 3% annualized and that in the eurozone it is 2.6%, with eight countries publishing data above 3%, including Spain.

This is why central banks need to give the impression of hawkishness and maintain rates or lower them very cautiously. However, monetary policy is far from being restrictive. Money supply growth is picking up, the ECB maintains its “anti-fragmentation mechanism,” and the Federal Reserve continues to inject money through the liquidity window. We can say, without a doubt, that monetary policy is beyond accommodative.

At the end of this article, the price of gold is above $2,400 an ounce, up 16.5% between January and July 19, 2024. In the same period, gold has performed better than the S&P 500, the Stoxx 600 in Europe, and the MSCI Global. In fact, over the past five years, gold has outperformed not only the European and global stock markets, but also the S&P 500, with only the Nasdaq surpassing the precious metal. This is a period of alleged recovery and strong expansion of the stock markets. On the one hand, the market is discounting the central banks’ continued accommodative and expansionary policies, even possible high debt monetization, given the unsustainable deficits in the United States and developed countries. That is, the market assumes that the Federal Reserve and the ECB will not be able to maintain the reduction of their balance sheets in the face of rising debt and public spending in many economies. As a result, gold protects many investors against the erosion of the currency’s purchasing power, i.e., inflation, without the extreme volatility of Bitcoin. If the market discounts further monetary expansion to cover the accumulated deficits, it is normal for the investor to seek protection with gold, which has centuries of history as an alternative to fiduciary money and offers a low-volatility hedge against currency debasement.

Another important factor is the central bank’s purchase of gold. JP Morgan is credited with the phrase “gold is money and everything else is credit.” All the world’s central banks include treasury bonds from countries that serve as global reserve currencies in their asset base. This allows central banks around the world to try to stabilize their currencies. When we read that a central bank buys or sells dollars or euros, it is not making transactions with physical currency but with government bonds. Hence, as the market price of government bonds has fallen 7% between 2019 and 2024, many of these central banks are facing latent losses from a slump in the value of their assets. What is the best way to strengthen a central bank’s balance sheet, thereby diversifying and reducing exposure to fiat currencies? Purchase gold.

The rising purchases of gold by central banks are an essential factor justifying the recent increase in demand for the precious metal. Central banks, especially in China and India, are trying to reduce their dependence on the dollar or the euro to diversify their reserves. However, this does not mean full de-dollarization. Far from it.

According to the World Gold Council, central banks have accelerated their gold purchases to more than 1,000 tonnes per year in 2022 and 2023. This means that monetary authorities account for almost a quarter of the annual demand for gold during a period when supply and production have not grown significantly. The ratio of output to demand stands at 0.9 in June 2024, according to Morgan Stanley.

Global official gold reserves have increased by 290 net tonnes in the first quarter of 2024, the highest since 2000, according to the World Gold Council, 69% higher than the five-year quarterly average (171 metric tonnes).

The People’s Bank of China and the Central Bank of India are the biggest buyers as they aim to balance their reserves, adding more gold to reduce loss-making exposure to government securities. According to Metals Focus, Refinitiv GFMS, and the World Gold Council, China has been increasing its gold purchases for seventeen months, and since 2022, it has shot up its reserves by 16%, coinciding with the increase in global polarization and the trade wars.

That does not mean full de-dollarization, as the People’s Bank of China has 4.6% of its total reserves in gold. US Treasury bonds are the most important asset, accounting for more than 50% of the Chinese central bank’s assets. However, its goal is to raise gold reserves to at least 14%, according to local media. Thus, it would imply a significant annual purchase of gold for years.

India’s central bank increased its gold reserves by 19 metric tonnes during the first quarter. Other central banks that are diversifying and buying more gold than ever are the National Bank of Kazakhstan, the Monetary Authority of Singapore, the Central Bank of Qatar, the Central Bank of Turkey, and the Central Bank of Oman, according to the sources cited above. During this period, both the Czech National Bank and the National Bank of Poland increased their gold reserves in Europe, reaching the highest level since 2021. In these cases, the aim is to balance the exposure in the asset base with more gold and less eurozone government bonds.

The goal of this central bank trend is to increase the weight of an asset that does not fluctuate with the price of government bonds. It is not about de-dollarization but about balancing the balance sheet from the volatility created by their own misguided expansionary policies. For years, the policy of central banks has been to reduce their gold holdings, and now they must come back to logic and rebalance after suffering years of latent losses on their government bond holdings. In fact, one could say that the world’s central banks anticipate their own widespread erosion of the purchasing power of reserve currencies due to the saturation of fiscal and monetary policies, and for that reason, they need more gold.

After years of thinking that money can be printed without limits and without creating inflation, monetary authorities are trying to return to logic and have more gold on their balance sheets. At the same time, many expected that the trade war between China and the United States and global polarisation would be reversed in the Biden years, and the opposite has happened. It has accelerated. Now, the latent losses in the sovereign bond asset portfolio are leading all these central banks to buy more gold and try to protect themselves from new bursts of inflationary pressures.

In an era of high correlation between assets and perpetual monetary destruction, gold serves as a low volatility, low correlation, and strong long-term return addition to any prudent portfolio.

Gold’s ascent toward $3000 an ounce was interrupted last month when China’s central bank halted its purchases. However, a survey of 70 central banks conducted by the World Gold Council (WGC) indicates robust future buying. None of the respondents foresee a decline in central bank purchases, with 81% anticipating an increase.

“China broke its 18-month gold-buying streak in part to basically ‘pump the brakes’ because prices have been skyrocketing,” said Jonathan Rose, CEO of Genesis Gold Group. “But more importantly they were testing resilience and control to see if their actions would cause prices to plummet, which they didn’t.”

Central banks significantly influence gold prices, with last year’s purchases nearing record levels. Despite private investors selling off in Q1, May saw a reversal, with ETF holdings rising.

Private buyers might bolster prices further, particularly if U.S. interest rates fall. The WGC survey revealed a strong expectation of increased gold reserves in central banks over the next five years. The motivations include strategic rebalancing, economic concerns, and geopolitical instability.

“We often disagree with the way central banks acts, but their motivations are aligned with our customers right now,” Rose said. “The central banks are hedging their investments because they are worried about turmoil tanking economies. Our customers feel the same concerns which is why they’re rolling over or transferring their retirements to physical precious metals.”

Genesis Gold Group specializes in taking old or current retirement accounts and moving them into Genesis Gold IRAs. This “safe haven” approach is becoming more popular as financial strife spikes across the country and around the globe.

The difference between individual investors and central banks as it pertains to gold is that with central banks, they have some degree of control over prices. As they push for Central Bank Digital Currencies, all eyes are on the U.S. Dollar and moves being made by BRICS nations. These factors suggest central banks will continue to play a crucial role in the gold market amidst ongoing global tensions and economic challenges.

Request the free, definitive gold guide from Genesis Gold Group today.

HSBC’s Paul Bloxham and Jamie Culling asked clients in a note: “Have commodity prices past the trough?” 

Their answer, very simply, “It seems likely.”

“Global commodity prices have picked up in recent weeks and could be past the trough,” the analysts said, noting an emerging “weak” upward global industrial cycle has materialized. They continued:

On the demand side, ‘green shoots’ in the global industrial cycle are becoming more apparent. On the supply-side, geopolitical factors are playing an increasingly disruptive role in the ongoing ‘super-squeeze.’ 

At a deeper level, real commodity prices have already fallen back to their long-run average – that is, the relative prices of commodities to other goods and services are now not unusually high. 

So, even if commodity prices only rise in line with other prices from here, they would be passed their trough. 

The analysts warned their new machine learning commodity cycle tool is forecasting a “Weak Bull” run, indicating, “If the trough has passed, the recent disinflationary force from falling commodity prices may be done. Central bank observers should take note.”

The timing of HSBC’s “Weak Bull” commodity run comes as inflation is reaccelerating in the US. Last week’s March CPI data dump showed a stronger-than-expected 3.5% YoY print, an uptick from the 3.2% YoY rise in February.

Summing up the latest inflation report…

The hot inflation print has pushed rate traders to price in the first 25bps of cuts between September and November. Initially, rate traders were pricing in March cuts.

Hotter-than-expected inflation puts upward pressure on rates and borrowing costs with higher risks of derailing Biden’s reelection odds as Bidenomics fails.

The reacceleration of inflation has Larry MacDonald of The Bear Traps Report warning, “We’re only one event away from a 1970-style stagflation explosion.”

Could the return of the mid-70s inflation storm result from an escalation of the Israel-Iran war where Brent crude soars past $100bbl?

Establishment media sources lie incessantly about our financial conditions, and when they are finally cornered and forced to admit how bad things are, they then lie about the causes.  That said, I find that these lies are usually designed to do one of two things:  Over-complicate the problem so that people give up thinking about it, or, distract from the problem so that people blame a scapegoat.

As for inflation, here is the bottom line:

Central Banks And The Fiat Flood

Rising prices are caused by two main drivers.  The first is money creation, or too many dollars chasing too few goods.  Central banks around the world have been FLOODING the system with fiat currency ever since the debt crisis of 2008 and the Federal Reserve within the US is the worst violator by far.  We are talking about tens of trillions (or more) in money creation, all supposedly as a means to stall or prevent a deflationary crash.

By the time the pandemic lockdowns were initiated and the Fed dropped $8 trillion+ onto the economy through stimulus measures like covid checks and PPP loans, the total US money supply was already at destructive levels.  The covid stimulus was simply the straw that broke the camel’s back.  So, if you want to know who is directly to blame for your daily expenses rising 30% or more in the span of three years, the first set of criminals are the central bankers.

Governments and certain corporate partners are also to blame, but the central banks are the root mechanism for all inflationary movements.

It’s my belief (according to the evidence) that central banks have deliberately triggered a stagflationary crisis with the intent to forcefully replace cash based economies with a new digital and cashless global economy.  However, that’s a discussion for another article…

Shortages And Core Resources

The other primary cause of rising prices is shortages or disruptions in key resources including oil and energy.  Keep in mind that the war in Ukraine has led to the west being cut off from large portions of the resource rich Russian market.  And, the war in Gaza has led to groups in the Middle East like the Houthis denying a majority of cargo ships and oil tankers from traversing the Red Sea.

By themselves, each one of these events seems like a small threat to the global supply chain, but when they pile up together the effects become detrimental.  For now, the biggest factor is rising energy prices because this is the key resource that allows all agriculture and manufacturing to function.  Every time oil prices rise you’re going to see prices in everything else rise.

This is the exact reason why the Biden Administration continued to dump the US Strategic Oil Reserves on the market for the past couple years.  This was their way of manipulating oil prices down in order to mitigate or hide the greater effects of inflation.  Now that they’re being pressured to refill those reserves and start buying again (at a much higher price) global oil prices and US prices in particular are spiking again.

Media Disinformation And Crushing Food Costs

Food costs have risen by 30% or more depending on the product since the beginning of 2020, and even though CPI reports several months ago showed a “slowdown” in overall inflation, this does not mean prices are going to go down anytime soon.  In fact, they will only keep rising with each passing year.

CPI is a tool for measuring the AVERAGE price increases of over 80,000 products and services across a wide spectrum.  Many of these items are not necessities and so they dilute the actual inflation we are seeing in everyday expenditures.  If we were to look at an average of only daily necessities like housing, energy, food, etc. then CPI would read far higher.

When the media touts a lower CPI print as a sign that the economy is improving, what they usually don’t mention is that the stat only represents how much higher prices are going to go.  A lower CPI does not mean costs on the shelf are going to go down.  Inflation is cumulative.

Meaning, that 30%+ increase in food that Americans have been dealing with – That’s not going away, it’s just not climbing as fast as it was.  And, as we’ve seen in the past couple months, inflation has the ability to return just as quickly to add even more gasoline to the fire.

Not long ago I was reading through an article from CBS that claimed they could explain why there’s been no respite in food prices lately.  In reality the entire piece was disinformation, blaming every possible scapegoat while ignoring the real causes.

Their main explanation is “Greedflation,” or the claim that companies are overcharging on food items.  In other words, blame businesses, don’t blame the Federal Reserve and don’t blame the government.  They’re “innocent” in all of this.

There is so far no concrete evidence to support the Greedflation theory.  Every business has unique expenses, unique overhead, unique industrial costs, unique quality control and unique resource costs.  One cookie company’s bottom line will be different from another cookie company’s bottom line.  That said, there are universal costs that directly correlate to higher prices regardless of the company, and that includes energy, labor, and core commodities.

For those that track the markets it’s obvious that commodities are climbing.  The Industrial Commodity Index continues to rise along with oil and gas prices.  Every base resource that companies use to make products is increasing in value and thus it costs them more to manufacture.  Agriculture in particular is heavily affected by oil prices as well as prices in fertilizer and farming equipment, not to mention higher costs in labor.

From 2020 to 2023 the total costs paid by farmers to raise crops and care for livestock increased by more than $100 billion, or 28%, to an all-time high of $460 billion in 2023.  Funny how that number tracks very close to the 30% increase in overall food prices since 2020.  The establishment media wants you to believe that high food prices are going to go away soon, and in order to trick you they need to convince you that the cause is something that can be “controlled” or “regulated”.

There is no indication that agricultural costs are going to stop increasing in the near future, so, that means each year food is going to cost you more than the year before.  It might even cost you MUCH more than the year before.

In conclusion, this is why people need to start looking at food as an investment similar to the way they might look at their 401K or any retirement plan.  If you want to mitigate costs in the future in terms of food you will need to purchase foods with a long shelf life now.  If you think that inflation is a passing phase and that things will go back to the way they were before 2020 then you probably won’t take this concern seriously.  But, consider this:

Well before 2020 I was warning regularly about an impending stagflation crisis.  The food storage I bought in 2020 now costs at least 30%-50% more to buy in 2024.  Meanwhile, some of the top economists in the country were denying such a thing would ever happen.  When it did happen, they claimed it was “transitory.”  This was also proven false.  Now they claim food will drop after companies are forced through regulation to cut prices.

One survival food company, Prepper All-Naturals, has proactively dropped prices to allow Americans to stock up ahead of projected hikes in beef prices. Their 25-year shelf life steaks currently come at a 25% discount with promo code “invest25”. Whether government intervenes or the market continues to react to poor fiscal policies, it is quickly becoming a necessity to invest in food security as soon as possible.

Government enforced price controls have never actually proven effective in stopping inflation.  Once you remove all profit incentives many businesses will close up shop.  This causes the supply of goods to go down and prices then spike anyway due to shortages.

Do you want to bet your future on establishment economists being right for once, or, do you want to just store some food today in the knowledge that prices are only going exponentially higher?

Both institutions are not only plainly anti-democratic but also inherently authoritarian. The central banker says, “Free markets cannot be trusted to direct the flow of goods and services, so a small collection of experts must be empowered to manipulate markets at their discretion.”

The spy agency says, “Free peoples cannot be trusted to make wise decisions based upon available information, so a small collection of experts must be empowered to manipulate what the public knows.”

In both instances, freedom is diminished. Adam Smith’s “invisible hand” of the marketplace is replaced with a banker’s gloved fist. Self-government is superseded by a national security surveillance State. A small caste of people exercise enormous power over everyone else.

Should real free markets ever return to the West, future commentators will surely look back at this era and wonder how sensible people could have mistaken their economies for anything but command-and-control enterprises. “The institutions controlling their markets were literally called ‘central banks,’” they will scoff.

We will appear quite gullible. Perhaps the biggest “tell” that we have been living under the mere illusion of free markets is the uncomfortable truth that the central banks of closed communist nations are scarcely distinguishable from those purporting to undergird capitalism. Both use their powers to choose economic winners and losers.

As with all human-devised schemes that ultimately betray their stated purpose, centralized control over the supply of monetary currency has been sold to the public as a necessary contrivance for the “collective good.” In this way, free peoples have handed authority over markets to a cabal of bankers who promise to maintain invaluable safeguards against economic volatility, unemployment, inflation, and poverty (even when these goals contradict one another).

Just as with mice and men, the best laid plans of central bankers often go awry. On the other hand, if their plan is to create periodic inflationary bubbles that allow wealthy investors to artificially grow the value of their assets before collapsing the economy, destroying middle-class workers’ life savings, and buying up bankrupt businesses for pennies on the dollar, then the central bankers get it right every time.

In the United States, the privately owned central bank known as the Federal Reserve provided so much stability (sarcasm alert!) that within two decades of its creation, its centralized management of the economy helped usher in the Great Depression. Instead of recognizing the social cost of that economic crisis as demonstrable evidence that central banks cannot prevent catastrophe, or worse, actually facilitate catastrophe, the Federal Reserve used its own failures to further justify its continued existence. Without us, things would have been so much worse! Where have we heard that excuse recently? Oh, right, it’s what the Centers for Disease Control, the Food and Drug Administration, and pharmaceutical bigwigs keep saying about their experimental “vaccines.” Birds of a feather scam the public together, after all.

The worst part of central bank tyranny is that it has destroyed sound money and private savings. In every country, a similar story has played out. First, people trade goods and services using some form of precious metal as a medium of exchange because gold and silver have historically retained their value over time. Next, a government mints coins made from those metals in order to promote lucrative trade. Then, inherently worthless paper currencies are introduced that are backed by the government’s promise that they may be redeemed for gold or silver at any time.

Finally, after people are accustomed to using paper currency, its tether to gold and silver is cut. So long as people continue to participate under the delusion that paper currencies have innate value, central banks and governments can print more worthless notes whenever bankers or governments need money. Inflation is the inevitable result. Whereas a person who earns an income in gold coins can store that gold and find that the value of his labor remains the same fifty years later, a person who earns an income in paper banknotes will find that the value of his savings (his stored labor) has evaporated. Central banks have destroyed sound money, middle-class savings, self-sufficiency, and private property.

What they have created is a government money tree that uses central bank inflation to steal from the public in order to finance the military infrastructure, policy preferences, and bureaucratic armies of the State. Espionage agencies — with their black budgets and covert mission directives — should be aberrations for any free society. Instead, central bank funny money ensures that they are well funded and independent operators whether the public wishes them to exist or not.

In every society, two monopolistic drives exist — one that seeks control over wealth and another that seeks control over information. Eventually, these monopolistic forces combine in order to maximize their power over ordinary citizens. Markets, after all, react to publicly released information, and spy agencies are only as robust as their operating budgets. It should be no surprise, then, that former intelligence operatives fill the ranks of not only defense contractors and weapons manufacturers, but also of news corporations, social media powerhouses, pharmaceutical companies, and global investment banks.

There is a symbiotic relationship between those who possess secret knowledge and those who generate wealth. Just as central banks manipulate the supply of money for profit, spies manipulate the supply of information for profit, too. Companies that track and data-mine our private information are in the espionage business. Intelligence agencies that warp public knowledge for institutional gain are in the business of destroying democratic republics.

Unfortunately, the mother lode of profitable surveillance-gathering lies just up ahead: central bank digital currencies. If governments are permitted to foist CBDCs upon the public, the unholy marriage between central banks and espionage agencies will be complete. In a world where money is created at the stroke of a key and private transactions are tracked in real time, there will be no such thing as private property, let alone real privacy.

However, there is a corollary to this emerging nightmare of total financial surveillance: the reintroduction of sound money based in gold and silver will support not only a return of free markets, but also a return of relative privacy. In order to curtail the tyranny of central banks and espionage agencies, ordinary citizens must starve the State. The easiest way to do so is to reject funny money for good.

If we were trying to explain to an enslaved society what freedom entails, we might say that free peoples own the fruits of their labor, communicate without external constraints, and trade among themselves according to their wants and needs. Free markets, private property, and free speech are the bedrock of any free society. We would not, however, describe freedom as a condition in which property rights are heavily regulated, trade is heavily supervised, labor is heavily taxed, monetary currencies are heavily inflated, or information is heavily censored. Enslaved societies are already intimately familiar with these attributes because they are the essential constraints burdening anyone living in bondage. If an enslaved people were trying to explain to us why anyone would ever choose to live in a state of bondage, they might say that most enslaved people don’t realize that they’re already living as slaves.

Central bank manipulation of money turns free citizens into debt slaves and finances the national security architecture that keeps them permanently chained.

Both institutions are not only plainly anti-democratic but also inherently authoritarian.  The central banker says, “Free markets cannot be trusted to direct the flow of goods and services, so a small collection of experts must be empowered to manipulate markets at their discretion.”  The spy agency says, “Free peoples cannot be trusted to make wise decisions based upon available information, so a small collection of experts must be empowered to manipulate what the public knows.”

In both instances, freedom is diminished.  Adam Smith’s “invisible hand” of the marketplace is replaced with a banker’s gloved fist.  Self-government is superseded by a national security surveillance State.  A small caste of people exercise enormous power over everyone else.

Should real free markets ever return to the West, future commentators will surely look back at this era and wonder how sensible people could have mistaken their economies for anything but command-and-control enterprises.  “The institutions controlling their markets were literally called ‘central banks,’” they will scoff.  We will appear quite gullible.  Perhaps the biggest “tell” that we have been living under the mere illusion of free markets is the uncomfortable truth that the central banks of closed communist nations are scarcely distinguishable from those purporting to undergird capitalism.  Both use their powers to choose economic winners and losers.

As with all human-devised schemes that ultimately betray their stated purpose, centralized control over the supply of monetary currency has been sold to the public as a necessary contrivance for the “collective good.”  In this way, free peoples have handed authority over markets to a cabal of bankers who promise to maintain invaluable safeguards against economic volatility, unemployment, inflation, and poverty (even when these goals contradict one another).

Just as with mice and men, the best laid plans of central bankers often go awry.  On the other hand, if their plan is to create periodic inflationary bubbles that allow wealthy investors to artificially grow the value of their assets before collapsing the economy, destroying middle-class workers’ life savings, and buying up bankrupt businesses for pennies on the dollar, then the central bankers get it right every time.

In the United States, the privately owned central bank known as the Federal Reserve provided so much stability (sarcasm alert!) that within two decades of its creation, its centralized management of the economy helped usher in the Great Depression.  Instead of recognizing the social cost of that economic crisis as demonstrable evidence that central banks cannot prevent catastrophe, or worse, actually facilitate catastrophe, the Federal Reserve used its own failures to further justify its continued existence.  Without us, things would have been so much worse!  Where have we heard that excuse recently?  Oh, right, it’s what the Centers for Disease Control, the Food and Drug Administration, and pharmaceutical bigwigs keep saying about their experimental “vaccines.”  Birds of a feather scam the public together, after all.

The worst part of central bank tyranny is that it has destroyed sound money and private savings.  In every country, a similar story has played out.  First, people trade goods and services using some form of precious metal as a medium of exchange because gold and silver have historically retained their value over time.  Next, a government mints coins made from those metals in order to promote lucrative trade.  Then, inherently worthless paper currencies are introduced that are backed by the government’s promise that they may be redeemed for gold or silver at any time.

Finally, after people are accustomed to using paper currency, its tether to gold and silver is cut.  So long as people continue to participate under the delusion that paper currencies have innate value, central banks and governments can print more worthless notes whenever bankers or governments need money.  Inflation is the inevitable result.  Whereas a person who earns an income in gold coins can store that gold and find that the value of his labor remains the same fifty years later, a person who earns an income in paper banknotes will find that the value of his savings (his stored labor) has evaporated.  Central banks have destroyed sound money, middle-class savings, self-sufficiency, and private property.

What they have created is a government money tree that uses central bank inflation to steal from the public in order to finance the military infrastructure, policy preferences, and bureaucratic armies of the State.  Espionage agencies — with their black budgets and covert mission directives — should be aberrations for any free society.  Instead, central bank funny money ensures that they are well funded and independent operators whether the public wishes them to exist or not.

In every society, two monopolistic drives exist — one that seeks control over wealth and another that seeks control over information.  Eventually, these monopolistic forces combine in order to maximize their power over ordinary citizens.  Markets, after all, react to publicly released information, and spy agencies are only as robust as their operating budgets.  It should be no surprise, then, that former intelligence operatives fill the ranks of not only defense contractors and weapons manufacturers, but also of news corporations, social media powerhouses, pharmaceutical companies, and global investment banks.

There is a symbiotic relationship between those who possess secret knowledge and those who generate wealth.  Just as central banks manipulate the supply of money for profit, spies manipulate the supply of information for profit, too.  Companies that track and data-mine our private information are in the espionage business.  Intelligence agencies that warp public knowledge for institutional gain are in the business of destroying democratic republics.

Unfortunately, the mother lode of profitable surveillance-gathering lies just up ahead: central bank digital currencies.  If governments are permitted to foist CBDCs upon the public, the unholy marriage between central banks and espionage agencies will be complete.  In a world where money is created at the stroke of a key and private transactions are tracked in real time, there will be no such thing as private property, let alone real privacy.

However, there is a corollary to this emerging nightmare of total financial surveillance: the reintroduction of sound money based in gold and silver will support not only a return of free markets, but also a return of relative privacy.  In order to curtail the tyranny of central banks and espionage agencies, ordinary citizens must starve the State.  The easiest way to do so is to reject funny money for good.

If we were trying to explain to an enslaved society what freedom entails, we might say that free peoples own the fruits of their labor, communicate without external constraints, and trade among themselves according to their wants and needs.  Free markets, private property, and free speech are the bedrock of any free society.  We would not, however, describe freedom as a condition in which property rights are heavily regulated, trade is heavily supervised, labor is heavily taxed, monetary currencies are heavily inflated, or information is heavily censored.  Enslaved societies are already intimately familiar with these attributes because they are the essential constraints burdening anyone living in bondage.  If an enslaved people were trying to explain to us why anyone would ever choose to live in a state of bondage, they might say that most enslaved people don’t realize that they’re already living as slaves.

Central bank manipulation of money turns free citizens into debt slaves and finances the national security architecture that keeps them permanently chained.

“On a year-to-date basis, central banks have bought an astonishing net 800t, 14% higher than the same period last year.”

Whether or not The January Effect will apply to the gold price as we finish the first month of 2024, there are plenty of indicators that the central bank buying spree will continue for at least the first half of the new year. Accelerating de-dollarization is just one factor, as powerhouses like China and Russia continue strategically moving further and further from the grips of USD hegemony.

Of course, actions by the Biden administration to isolate Russia with sanctions in the wake of the Ukraine conflict only provide further impetus for the Russians to continue divesting in any way they can from the US dollar. Combined with a volatile ruble and a wave of new American spending to feed its proxy wars in Ukraine and Israel, it only makes sense that Russia’s gold coffers will continue to grow.

You can also bet on China and Russia buying significantly more gold than what gets reported publicly, so the real numbers are always higher than they seem. As Jim Richards has pointed out many times, such as in this tweet from Q1 last year, countries like Russia and China hold gold acquired through off-the-books buying programs that far exceed what they officially claim:

“Central Bank of Russia reported a gain of 30 metric tonnes in its gold reserves. That’s after a year of flatlining more likely due to non-reporting than non-acquisition. Nice to see Russia back in the game.”

For more central bank gold-buying fuel, the Fed, claiming victory against inflation, has actually given up on fighting it. The Fed knows it backed itself into a corner and has no choice but to lower rates in 2024 — which means central banks will need a way to hedge against those easier money policies. And while the Fed’s balance sheet shrank in 2023, it didn’t even come close to closing the gap created by the trillions it added during the Covid era. Of course, that wouldn’t stop Powell from running his victory lap at 2023’s final post-FOMC press conference about stopping rate hikes:

“That’s us thinking we’ve done enough.”

However, lower rates in 2024 would bolster the case for even more inflation, not less — leading to a tanking dollar and surging relative prices for gold and other commodities. Peter Schiff isn’t the only one to have pointed this out, but all you have to do is forget what central banks say and look at what they do. The stage is set for banks to add more gold to their reserves to hedge against downward pressures on the dollar, even as the Fed claims victory over the inflation battle. The only question is which will occur first: a dollar crisis or a sovereign debt collapse? Central bankers aren’t going to wait to find out.

It's only the 2nd day of Jan. and the #NationalDebt already blew past $34 trillion. I think 2024 will set a record for the largest one-year increase in the U.S. National Debt in history. The only question is will there be a sovereign debt or #dollar crisis before the year ends.

— Peter Schiff (@PeterSchiff) January 3, 2024

After all, in 2023, not even higher nominal yields managed to slow down gold’s rally. Booming Treasury yields reflect less certainty in the health of the economy, not more, as investors flee to the perceived safety of Treasurys and bonds. But what goes up must come down, and a collapse in the Treasurys market would nuke the dollar, taking the rest of the economy with it:

“…a Treasurys crash will force the value of the dollar to plunge, which will lead to a brutal economic downturn — one in which the “standard of living” in the country will drop dramatically.”

Finally, 2024 brings even more uncertainty in the face of the US’s continuing proxy conflicts and, notably, a US presidential election that is reinforcing a global picture of domestic political instability. With candidates on both sides like RFK Jr. and Vivek Ramaswamy embracing anti-establishment messages about reigning in central banks, the military-industrial complex, and the US debt spiral, there are plenty of candidates shaking the nest in ways that would have been unheard of just a couple elections ago. As Robin Tsui of the South China Morning Post points out, somewhat obviously:

“…the potential for US government shutdowns, fiscal policy debates, and political stand-offs ahead of the 2024 US election cycle persist.”

It’s true that many economists and Fed officials haven’t given up hope for a ”soft landing” next year, which would imply decreasing demand for gold. But as time has pressed on, this is a claim that even they admit could end up being proven hollow. To any honest observer, more signs of instability, inflation, negative-yielding debt, and election-year madness all point to a strong need for safety throughout this year. 

Looking past the claims that US bankers and officials are making in public, central banks know the truth: they need to keep gobbling gold. It’s the only strategic maneuver that makes sense, with few other meaningful ways to protect themselves from becoming collateral damage in the confluence of self-destructive economic meddling, overstretched foreign entanglements, and election-year political turmoil in the US.

This shows us the bubble bias of many investors. We live in a world where two generations of market participants have only seen rate cuts and massive liquidity injections. Central banks have created huge perverse incentives in markets that should have been prevented if they truly followed their mandate of stable prices. On top of it, the ECB faces another risk. It must avoid following the siren calls of interventionists if it wants the euro project to survive.

The euro is the biggest monetary success of the last 100 years, and the ECB’s excessively loose policy may destroy its position as a world reserve currency. The interventionist hordes of European socialism want the central bank to become an instrument in the hands of governments to nationalize the economy and destroy the currency’s purchasing power.

Don’t be mistaken; for those who come up with soft words demanding “expansive-looking monetary policy,” what they are looking for is exactly what they have supported in Argentina, Venezuela, and Cuba: the expropriation of wealth through the dissolution of the purchasing power of the currency.

It would be completely irresponsible to implement massive rate cuts for several reasons.

Central banks are placing all the focus on the price and not the quantity of money. Ignoring monetary aggregates is very dangerous, and centering decisions only on rates may create a larger problem: a market bubble and a real economy contraction.

By ignoring monetary aggregates, central banks may cut rates with no real effect on the productive economy and solve nothing. There may be a significant contraction in economic activity even if rates decline, as credit availability worsens even with declining rates, but markets keep inflating the financial bubble.

Inflation has not declined persistently. Since the consumer price index is a year-on-year calculation from a very high figure, the base effect accounts for up to 85% of the decline in inflation. The same base effect could adversely affect inflation in the coming months if the annual path of price rises remains.

The greatest economic aberration of our time, negative interest rates, actually made the structural weakness in the economy worse, causing it to slow down.

The economy has been accumulating poor and indebted growth data for years in which misguided so-called “expansive” monetary policies have been implemented. Negative rates and extreme liquidity injection have not generated greater or better growth but have left states with enormous imbalances.

Consumers are still suffering from the monetary disaster created in 2020. We are talking about a cumulative inflation rate of more than 22% since 2018 and a price rise that continues to be worrying, particularly in non-replaceable goods.

Monetary aggregates show that there is a private sector recession disguised by accumulated debt. Between January 2020 and July 2022, the money supply (M2) soared by an insane $6.3 trillion, according to FRED. It has declined almost a trillion dollars from its peak. The impact of this decline in money supply on the availability of credit and the broad economy will not be evident until 2024, when it coincides with an enormous wall of debt maturities. Central banks went from excess money to overlooking the money slump. Both are equally negative. One created the inflation burst, and the second is driving a private sector recession disguised by debt.

Inflation is a monetary effect. What some call cost inflation, commodity inflation, or supply shock is nothing more than more units of issued currency than real economic growth going to relatively scarce assets. Unit prices may rise for exogenous reasons, but they do not generate a sustained and cumulative rise in aggregate prices, which is what measures inflation. If a price soars due to an exogenous factor, the rest of the price does not rise at once if the currency issued remains constant relative to economic growth.

Of course, the system creates a whole series of experts who blame inflation on everything and anyone except for the only thing that can make aggregate prices rise at once, consolidate that annual burst, and continue to rise: the decrease in the purchasing power of the currency.

Those who understand money predict inflation and warn of the current risk. From Steve Hanke’s articles and the Inflation Dashboard that accurately predicted the inflation eruption of 2021–22, Richard Burdekin, “The U.S. Money Explosion of 2020: Monetarism and Inflation” (2020), to Claudio Borio, “Does money growth help explain the recent inflation surge?” (2023), or Juan Castañeda and Tim Congdon, “Inflation, The Next Threat?” (2020), dozens of studies warned of the arrival of inflation by excess monetary and explained the empirically monetary cause. Some argue that in 2009–2019 there was no inflation and money was also printed massively, but they do not understand the quantitative theory of money and ignore that the monetary expansion of 2020–22 was up to five times greater than that of the previous period of stimulus plans, as well as fully dedicated to government spending programs.

If we look at the contraction of monetary aggregates, inflation should have dropped faster, and the economy would be in a recession. However, the accumulated effect of massive money growth added to an unstoppable debt-fueled government deficit makes the impact of the 2020–21 liquidity explosion disguise the risks.

Inflation was created by the wrong monetary policy, and incorrect central bank measures may have lasting negative impacts on the economy. The first effect is evident: governments continue to crowd out the real economy, and families and businesses suffer the entire burden of rate hikes. Maybe the objective was always to increase the size of the public sector at any cost and implement a gradual nationalization of the economy.

Market participants should stop encouraging bubble-generating policies, and central banks should focus on monetary aggregates to avoid boom and bust cycles. The negative effects of the current money slump may arrive at once with the wall of maturities. Even if we avoid a recession, it will likely be a false way out with a debt-bloated government consumption figure, weak productivity, and private sector growth.