Is History Repeating?

Every fraud has its own demise built in. I have written this many times in the past, but I believe now that we are seeing a few examples of what I am talking about.

The ponzi scheme that is the Chinese Wealth Management Product is blowing up. Retail investors were led to believe that these products were like bank deposits and backed by the banks. In reality, these products were unsecured units in a pool of loans that could be invested in almost anything the pool manager wanted to invest in. Most of these funds are in the real estate sector. The reason it is a ponzi is that when the investors wanted their money back the plan sponsors would sell more Wealth Management Products and would pay off the original investor not with their funds but newly-raised funds.

Many of the companies that have been the beneficiaries of these investments have seen their bonds crash 30-50% overnight. This is not just Evergrande but many other companies also.

The trillions of dollars invested in these funds have led to a massive bubble in Chinese real estate and other sectors in the economy. The scheme is now blowing up not only because the flow of new investors is drying up but, even more importantly, the real estate market and other areas where these funds have been invested, prices have not only stopped rising but are actually contracting.

I believe China is in deep trouble as prices are rising uncontrollably (fastest pace in 26 years -Zerohedge), there are rolling blackouts because of a lack of coal, gas and oil to produce the needed electricity. When you have over 1.3 billion citizens and many starting to struggle financially the threat to the regime becomes all too real. Throughout history, such circumstances leads to blaming others for the problems that exist and many times have led to war. It appears to me that the focus on Taiwan could be the result of the economic troubles being experienced there and may lead to action against Taiwan sooner than many have expected.

Of course, if the Chinese government steps in and bails out the banks and companies on the hook they may be able to buy some more time.

This is important to us here in the USA because not only are we reliant on China for many of our necessities but we are also, by treaty, expected to defend Taiwan in the event of a Chinese attack.

I believe that the breach of Taiwan airspace that is taking place daily may be practice for an invasion. I remember in WW2 when the allies ran the same game. They would mount daily excursions behind enemy lines for weeks and months. On the day of the actual attack the Germans, believing it was the same as any other day, just disregarded the raid. It was a massive victory for the allies with virtually no opposition. Is history repeating?

Another episode in history comes from the old USSR. Right up until their collapse the economic numbers were excellent. Too bad the people there were living in a different reality than the “reality” that was being presented to them by their “leaders” and those complicit in the media (virtually ALL in the media by decree).

I remember reading about shortages of virtually everything and long lines to get the necessities of life. I even remember reading about starvation in the late-stage USSR while crops rotted in the fields because nobody would harvest them.     

I believe that history may be repeating itself right here and right now in the USA. It appears that the supply chain disruptions are a direct result of “printing” money and paying people to do nothing. It’s not enough that the act of conjuring up “money” out of nowhere which produces NOTHING but when that “money” is spent on real goods and that real good is consumed and there is not enough laborers to replace that item- shortages occur. If this lasts long enough the shortages become chronic.

Day after day I hear about how great we are doing but anyone who is paying attention knows that the numbers we are being fed by our “leaders” and the complicit media have no bearing on reality.

Unemployment Rate -5.4%. Yeah ok! Try over 25% (Shadow Government Statistics)

Inflation 5.2%. Try 13%. Of course, everyone has a different inflation rate based upon what they actually buy or consume. The reality of both of these numbers is STUNNING. Basically, wages are not rising anywhere near where the cost of living is going up and there appears to be no end in sight at this time.

I believe the supply chain disruptions can be blamed on two things.

#1 The climate change agenda. As the “leaders” demonize those companies that produce the resources that we need to survive so they can fast-track their green agenda, it has led to less exploration, less production and higher prices for all forms of energy and goods. While it may be a noble gesture to get to a green future the way they are going about it is a major reason for these supply chain disruptions. India, China and many other countries are having rolling blackouts that is hampering production of goods. Prices are rising so fast that even food production shut down in the EU for a time.

#2 Global shutdown of the economy. This was a man-made disaster. The virus is real (like all other viruses). However, based upon the numbers and statistics the shutdown of the economy was a DISASTER. A normal response would be to keep those who are sick quarantined- not everyone. In addition, the trillions sent out globally to keep people fat and happy on their couches has led to consumption (something for nothing) and not enough products being produced to replace what we just consumed. By the way, these governments didn’t have that “money” lying around. The world went even deeper into debt.  Remember that we were “printing” money in the trillions to retain the illusion of normality LONG before we ever heard of Covid 19. The USA is the greatest debtor nation in world history and digging deeper and deeper into debt by the minute. This is what will be the likely cause of our demise.

Unfortunately, I believe this charade will continue until the day, like the USSR in 1990, we will finally be exposed as the frauds that we are. It is already apparent to many that the numbers don’t add up but we won’t admit it until the last moment. Anyone who has not made preparations at that time will likely be VERY disappointed. This outcome will cause pain to everyone but those that made provisions will have a lot better chance at getting through the chaos that is likely to ensue.

The IMF is issuing $680 Billion in SDR (Special Drawing Rights). This is a global currency that is actually a basket of currencies. Central Banks around the world continue to conjure up tens of trillions of currency units (at virtually no cost or labor). This appears to me to be a last-gasp attempt to keep the underlying rot in the system covered up.

The fact of the matter is that many individuals, companies, townships, cities, states, and federal governments have made “promises to repay” that can only be kept if the value of what you are being repaid IN is drastically reduced.

How likely is it that we could pay off the nearly $29 Trillion we owe just for the federal government (Admitted) debt? To make it easier to understand it would be $86,000.00 per citizen and $228,000.00 per taxpayer to retire that debt. Let’s not forget about social security, medicare, and prescriptions that we are paying for and we are on the hook for. This number would be $475,000 for EVERY CITIZEN to pay off. Add that to the $86,000.00 and $561,000.00 is YOUR INDIVIDUAL bill to pay this off. Keep in mind that 25% of our population is on MEDICAID. That means NO ASSETS. *

What this means to me is that the “printing” we have seen so far (and I believe there are hundreds of trillions we are not being told about- Dr. Mark Skidmore from MSU says $140 Trillion has been spent and unaccounted for) will be dwarfed by what they need to do right now to avoid implosion.

What is the VALUE of an asset that costs nothing to create and is being created in unlimited amounts?

What is the VALUE of promises being made by entities that cannot possibly be kept?

How long will it be before the populace recognizes they have been fed a pack of lies?

How many of those green pieces of paper will it take to buy the real assets you need to survive in the near future?

However you may answer those questions I know that owning gold, silver and other hard assets and the companies that produce such goods allows me to not have to answer most of those questions. I also believe that the answer is that the fiat currencies will all fade away and real stuff will still have real VALUE. Focus not on price but VALUE and I believe you will be far ahead of the game.

Be Prepared!

*Information obtained from USDEBTCLOCK.ORG

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

Commodities are generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only be a small part of a diversified portfolio. There may be sharp price fluctuations even during periods when prices are overall rising.

Precious Metals, including gold, are subject to special risks including but not limited to: price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.

Diversification does not ensure gains nor protect against loss. Companies mentioned are being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk regardless of strategy.

********