The Fed’s proactive approach to crisis management includes changing laws, ignoring existing ones, and implementing unprecedented measures like seizing banks and bailing out deposits beyond FDIC limits, demonstrating there is no rule of law during financial crises.
The US dollar’s dominance as the global reserve currency stems from the 1944 Bretton Woods system, with all other currencies essentially functioning as derivatives of the dollar, allowing the US to maintain a strong currency despite growing national debt.
Zombie companies with profits less than interest expenses face increased risk of default as interest rates rise, potentially leading to bank failures due to loan losses and the duration mismatch between long-term loans and short-term deposits.
A true gold standard involves people depositing gold, earning interest on it in gold, and using it as a medium of exchange and unit of account, leading to productive enterprises setting gold prices and paying gold wages.
The fundamental price model for gold and silver, which calculates prices if all futures speculation were to unwind, helps determine market tension and desired prices, according to Keith Weiner of the Gold Standard Institute.
The basis and lease rate are crucial indicators of gold and silver’s abundance or scarcity, with higher basis indicating more abundant metal and higher lease rates reflecting more expensive, scarcer metal.
Challenging the quantity theory of money, Weiner argues that gold mining and honest credit have different causes and effects than fiat currency expansion, with credit in a gold standard leading to increased production rather than inflation.
To transition to a gold-based system, offering interest on gold and allowing debtors to redeem paper debt for gold could create a market for determining the exchange value of paper bonds for gold bonds.
Paying interest on gold and silver is growing exponentially, potentially leading to a natural emergence of a gold standard as more people choose to put their gold to work earning interest.
Opting out of currency devaluation requires offering alternatives, as people will choose honest money over devaluation when given the choice, acting in their own self-interest regarding their finances.
Short-term interest rates, including T-bills and central bank rates, closely mirror market conditions, with T-bill rates dropping 40 basis points in recent months despite the Bank of Canada’s rate cuts, signaling a potential economic shift.
The commodity supercycle that peaked in 2008 was followed by a massive financial bubble in 2011, potentially leading to a severe contraction comparable to a Great Depression.
Gold has surged 38% this year, with some junior gold stocks up 150%, offering a practical investment alternative to major or mid-tier mining companies.
Junk bonds are currently overbought and due for a correction, with rising yields potentially making both stock and junk bond prices vulnerable in the near future.
Russia and China have been accumulating gold for 12 years, while Canada sold its reserves at low prices in the late 1980s, highlighting the potential importance of gold-backed currencies in maintaining central bank accountability.
Secular inflationary bear markets are the most severe stock market crashes, characterized by extended periods of poor real returns lasting decades, in contrast to shorter crashes like those in 1929 and 2000.
During secular inflationary cycles, stocks are not an effective hedge against inflation, and these cycles can lead to worse stock market performance over the long term, typically lasting 10-20 years.
In a secular bear market, bonds provide a safe haven for investors to dump stocks, resulting in worse stock market performance during inflationary periods.
Conversely, bonds in a secular bull market allow investors to profit while stocks crash, highlighting the importance of bond market dynamics in overall market performance.
Stocks can initially rise at the beginning of an inflationary cycle but tend to get hit hard once inflation reaches the middle point, according to the video’s analysis.
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