Category: The Great Reset

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3 – and That’s The Magic Number

On the 3/3 a woman called Sarah, aged 33, was murdered by a man in London. A policeman, as it happens. I don’t claim the credit for spotting that one, but it does lead into some interesting coincidences, especially considering how the story has been used way beyond being a murder case that should be investigated with respect for everyone until…no, innocent until proven guilty and policing with logic instead of emotion seems to have gone by the wayside.

Amongst the media circus for everyone to invest their emotion in, there were even calls from some for a curfew for all men to be home by 18:00. That supposed believers in a free society think it’s okay that one incident like this should ride on the rights and livelihoods of 60 million-plus people is bizarre. However, it fits with the whole Corona regime that we are entering a Minority Report-style world where everyone is believed to be infected unless proven otherwise and now, everyone is believed to be guilty unless proven otherwise. Anyway, didn’t they miss the other big question it raises – who’s going to enforce this curfew if something so extreme was ever allowed to happen? The Police?

If there is anything to really be gained from this story, it’s surely that the police themselves cannot be trusted. I fear however, that even this will be used against humanity. All it needs is someone to say humans can’t be trusted to police each other…if only there was some way a computer, with it’s impeccable logic and lack of prejudice could do the job. Maybe a robocop or robodog? Let’s just forget for a moment that computer software is always programmed by humans, with huge margin for error. Robocop from the 1980s was rather prescient in seeing how it could go.

Meanwhile, journalism seems keen to focus on the alleged perpetrator still receiving his salary while suspended from his job. Even helpfully repeating across the globe how he will still receive his at least £33,000 salary. Here, here and here. What a bizarre figure to concentrate on. Unless…..dipping into the world of freemasonry, Google tells me there are 33,000 lodges worldwide, with 33,000 members in many lodges. Continuing the search theme, other newsworthy stories further feed the conspiratorial fires. It’s amazing how many COVID-19 injections seem to be delivered in batches of 33,000. Utah, for example, a home of alternative religion and mystic rites certainly seems keen on the magic number. Gibraltar just completed it’s injection programme too, although this media source doesn’t seem to be in on the numerical importance. Then we have the shooting in Georgia, also successfully being used to whip up racial and gender division where there previously was none, with this story helpfully telling us that the alleged perpetrator came from Woodstock, Cherokee county with a population of…33,000.

Why am I bringing all of this up, do you ask? Returning to the world of finance, let’s finish with the biggest 33,000 financial sign going. Amongst all these 3’s the world’s biggest stock market, the DOW Jones Industrial Average hit an all-time high last week. I don’t need to tell you what it was before you visit the link, do I? The Federal Reserve even helped out, the story tells us, with soothing words and promises of further stimuli to keep the party going, despite the reality of every economic indicator. I find myself wondering if words and actions may diverge soon. At least for a little while until other parts of the agenda are enacted.

I shall leave the final words to De La Soul, with their 90’s hit, although apparently that was a cover of Schoolhouse Rock / Bob Durrough in 1973. Meanwhile, we can all ponder what the 33,000 signifies to those in the know, along with asking the how and why of Wayne Couzens’ black left eye.

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Bitbubble

Last night was one of those nights where you wake up and things occur to you. I’ve had quite a few of those lately, but this one seemed especially illuminating. For a while now, we’ve had the word bubble planted in front of us by the media for quite a while to convince us stock markets, bond markets, commodity markets and biggest of all, cryptocurrencies are too high and may be about to crash.

Using reverse psychology, you should wonder if there really is a bubble. After all, a real bubble happens when everyone is too carried away by the emotion and success to recognise the bubble for what it is. In fact, bubbles don’t normally get identified until long after they pop. In hindsight, a graph usually makes it clear and everyone who once yelled loudly about their success now remains quiet and tries to forget the whole sorry episode.

Perhaps the one where you could say the graph seems to show a bubble, is Bitcoin. While I regret not being in on the Bitcoin boom, I’m still not convinced and find myself on the side of Peter Schiff and Jim Rogers, versus such other illuminaries as Doug Casey and Robert Kiyosaki. Yes, billions are being made and yes, we can agree fiat currencies are in massive decline. However, to me, the best medium to avoid that is the precious metals, with thousands of years of history to prove it, not electronic bits on a screen with no intrinsic value. Of course, the blockchain technology, decentralisation and ability to pay without banks are excellent, but it all runs on establishment hardware. Beginning with your smartphone, then the networks that pass your data across the world. As the establishment gets better at tracking, they will undoubtedly find ways to switch you off if they want to. There are certainly some fascinating debates out there to watch on the subject between these knowledgeable and successful people. Meanwhile, stories like this, about a German who won’t give the police his password and would rather sit in prison, remain amusing and stick two fingers up to the powers that be.

I am certainly an interested observer. Even the mysterious Satoshi Nakamoto, who supposed started up Bitcoin is an enigma. For some reason, his name reminds me of the government department, the NSA (National Security Agency) and it’s always seemed strange that organisations with a global reach and unlimited funds are unable to track down the person who started it all. As an adult, you know that sometimes the best way to keep a child or dog occupied is to throw them a ball and part of me has wondered lately if that’s exactly what’s happened here. Throwing a ball to keep people busy and distract them from the best investments, while you clean up on the cheap.

Take, for example, the recent purchase by Tesla of $1.5 Billion worth of Bitcoin. Why would they do that, you might wonder? Whatever reasons are given, I find myself doubting they are the full truth. Then, we hear that Apple may also buy Bitcoin. Both stories helpfully plugged on mainstream media, to ensure maximum public reach.

So why are they buying?

Last night was my own Eureka moment. On a yearly basis, there isn’t enough silver mined to meet demand. Only about 80%, with the rest met by recycling. Fair enough, excellent reuse, but for how long will there be enough scrap silver to go around, and, if a sniff of inflation came around, how many of those recyclers would be willing to sell their metal at the current prices? It led me to get thinking about the products of Tesla and Apple, and the amount of silver they consume yearly. In the case of Tesla, one electric car consumes 1 kilogram of silver. It doesn’t sound like a lot, but if they make one million cars a year, then they will consume 5% of world silver demand. To put that in perspective, Ford alone produced 4 million cars last year. When it comes to Apple, I am grateful to this excellent infographic for explaining it all very clearly, albeit it from 2013. I can only guess that bigger iphones means even more metal in there.

Here’s my view – the public has been thrown a ball to play with. Indeed, it may continue to shoot up and entertain us all, the same way the Dutch went wild for Tulip bulbs in Amsterdam in the 1600s, and for a while, we may all feel ourselves rich or stupid for not participating. Indeed, some will walk away with fortunes. The majority probably won’t, however.

Meanwhile, the elite can stock up on the proven store of value and have a good laugh as many lose everything and are forced to succumb to The Great Reset.

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UK Government Borrowing in the Time of Corona

The BBC lays the amount of new money created in the UK, during the Corona crisis. To spell it out :-

“Since the beginning of the financial year in April, government borrowing has reached £214.9bn, £169.1bn more than a year ago.

The independent Office for Budget Responsibility (OBR) has estimated it could reach £372.2bn by the end of the financial year in March.”

https://www.bbc.com/news/business-55013192

The natural consequences of this? Inflation, even if it takes a few years for the currency to begin circulating, or the death of the pound? Take your choice.

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Stock Markets and Gold

Now for more news, your stock market investments may be worth under one-third of their value in 2000.  Gasp.  Yes, the gain of the last 20 years has been illusory.  For sure, some countries and some market sectors have done better than others, but for the USA main index, this is exactly what has happened.

(Chart: DJIA priced in ounces of gold)

Even if large corporations prosper, the US DJIA stock index and gold have a history of a near meeting when a financial crisis bottoms out. Currently, the DJIA is worth around 14 times the price of an ounce of gold. In 1932 and 1980, just over one ounce of gold bought the DJIA. Whether a large stock market crash achieves that, as was the case in 1932, or inflation pushing up the gold price, as was the case in 1980, it may be destined to happen again.

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Oil and Gold

Oil is still one of the biggest building blocks of life.  Regardless of whether you now work from home instead of driving to work every day in the gas-guzzler or not.  It’s used in everything – fuels, plastics and pharmaceuticals, to name a few.  In fact, if you now work from home, chances are you’re turning up the winter thermostats a bit more often than you would at work.  You’re probably also buying a lot more food from the supermarket, most of it encased in plastic packaging.  Even if your heating system is not oil-based, oil remains one of the main fuels available for generation of electricity, and could well do so for many, many years, regardless of how many windmills they build.

So, the good news.  You’ll be pleased to hear is that oil is at an all-time low, when measured against gold.  Luckily enough, since with your earnings being one-sixth of the 1970 value, you may not be able to afford to keep the house warm or drive a car otherwise.  Any apparent price rises you see at the pumps are merely an inflation of your fiat currency.

Now for the bad news, can it continue?

Maybe not.  For many years, gold and Oil actually maintained a near 10:1 ratio relationship.

(Chart: Gold/Oil ratio 2010 to 2020)

As the chart shows, this relationship has become distended as a result of the Corona crisis. There’s now a near 50:1 relationship as of August 2020. This may imply oil is actually quite cheap, gold is expensive, or that the ratio no longer holds. There has been a multitude of media articles heralding the death of oil.  However, it seems to have missed the attention of many that all of this data – everyone’s Facebook posts, Instagram images, or cloud software solution is stored on a server somewhere that requires electrical power to run. For sure, in the case of one Instagram post, that electrical consumption is miniscule, but multiply it across a world of 7 billion people, and you get an idea now of the immense electrical power required. Oil, natural gas, and coal are still heavily used in electrical power generation across the globe.

(Chart: Actual and predicted power sources to 2030)

The eagle-eyed among you may have spotted the chart dates from 2003. This was deliberate since more recent data shows it to be correct. If so, the future trend for oil consumption is still upward.

(Chart: Energy consumption to 2040)

So, and this is only a question, not investment advice, maybe oil itself is not finished yet as an investment.  If not, could it revert back to the 10:1 ratio with gold and if so, at what price for both?

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Housing and Gold

Now for some big news.  If you live in the UK, your house topped in value in 2005 and has been falling ever since.  In fact, it’s now about one-quarter of what it was worth then.  What?  I hear you say.  Okay, yes, in fiat currency units it has gone up, but measured in gold, it has fallen dramatically.

Measured this way, house prices are very close to the 1950 mean.  However, with the Corona crisis still in full swing, employment uncertainty for many and wages still at one-sixth of their 1970 value, it’s entirely possible the market could still have a lot further to fall.  Conversely, if something happens to get wages closer to the mean or inflation rises, well, they could easily move upwards in fiat currency terms especially.

In this case, the housing market is hard to exit, unless you prefer the uncertainty of renting.  Everyone needs to live somewhere.

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Textiles and Gold

Clothes are really cheap right now, as retailers dump tons of unsold stock from the 2020 fashion ranges onto the market at bargain prices. If you already have enough clothes, fine, but if not, it might be a good time to ensure you do, especially clothes to see you through cold winters. With this glut, it’s hard to know what will happen to all elements of the clothing supply chain in the future: Cotton farmers, Garment manufacturers, and clothing retailers.

The low price of cotton has already made it hard for growers in countries like India to turn a profit and it’s hard to know how they are coping with this huge change in market conditions.  There’s been talk of suicides in the media.  With cotton at an all-time low, we can assume that prospects are not great for some cotton farmers.

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Food and Gold

100 years ago, the average household spent up to 50% of its income on food. Today, that figure is nearer 10%, giving us all more disposable income for consumer goods, bigger mortgage repayments, and exotic holidays.  Food is cheap, almost too cheap, in fact.  As some farmers struggle to turn a profit and big supermarkets control the supply chain.

(Chart showing food prices as a proportion of income)

Of course, some of this is due to technological improvements in farming and manufacturing, but much of it is due to fiat currency inflation versus gold.  Perhaps it can’t last forever – we may well already be being prepared for future food shortages and increases in food prices. You may have already noticed shortages during the crisis or increases. On a personal level, visiting the supermarket regularly, a 20-25% increase in fruit, vegetables, and dairy products has occurred since March 2020, when Corona began. That’s interesting, as these products are all the ones with the shortest shelf life, that are most immediately impacted by price rises. Others, like dried, tinned and frozen goods, may be in huge stock at warehouses down the supply chain behind the supermarket facade, and price rises may take longer to feed through. Observe these headlines from recent times, as to what they may be planting the seed in your head to germinate for:-

“UK potato farmers fear another washout for this year’s crop. “

The Guardian, August 2020

“Bread price may rise after dire UK wheat Harvest.”

BBC News, August 2020

“Coronavirus: Meat shortage leaves US farmers with ‘mind-blowing’ choice.”

BBC News, May 2020

If you wonder how far food prices can rise during a monetary crisis, then here is an example of prices from “Fiat Money Inflation in France,” an excellent study of the hyperinflation that occurred there during the French revolutionary times, which coincide with the decline of the French empire before the handover to Great Britain.

Now, how well covered are you for those kinds of price rises in basic commodities, the essentials of life?

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Currency Delivery in 2020

The whole Corona crisis has also shown how digital the world has become concerning money. The furlough scheme is a major example in itself. UK Businesses were expected to log their furlough claims using the internet. The IT infrastructure and software to support this was in place in record time – major IT projects can often take months or years to design, develop, thoroughly test, and release. It’s then an example of how the currency can now be distributed quickly to millions, through the central government, to businesses, then distributed electronically to customer accounts in banking computers. Not a single physical coin or note ever having existed.

Many other nations introduced a furlough scheme, but the USA did not. In this case, they mailed out Corona stimulus cheques of $1,200 to everyone. Lamenting, while doing so, that it was a shame that it was taking longer because they needed to get signatures on every cheque. Then, that it would have been so much easier had they had more direct banking details, such as a nominated bank account, to send the money out to the recipients electronically.

As to spending, well, more and more of it became electronic as internet shopping took off even further. Still, some preferred physical currency to a certain extent. However, one of the early casualties of Corona has been cash – the number of shops now insisting on electronic payments only and media stories saying that cash can help spread the disease is a clear signal that the system no longer wants people using old-fashioned coins and notes. Also, remember Gresham’s law about bad money forcing out good? There is probably a case that people are genuinely retaining more banknotes and coins at home, just if they are needed for some kind of emergency. However the Corona crisis goes, it doesn’t seem like good news for savers or freedom.

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Furlough

The Corona / COVID-19 crisis has invented a whole new multitude of ways to distribute money to favoured interests and individuals. In addition to being unemployed, you can now get your full salary for doing nothing, while someone else you worked with has to continue to do their job, on the same salary, with all of the commitments their job requires. In the UK that has become known as ‘furlough’.  In many cases, it goes way beyond those in employment – the self-employed can also make claims to get their earnings covered. Staying at home, being paid full salary, having all the time in the world to do the house up, improve the garden, or even find another job to boost your earnings even more – a concept in the UK that has become affectionately known as “double-dipping.” It all sounds idyllic, doesn’t it, but there must be a catch, and, of course, there is.

If the various schemes introduced to pay employed people to do nothing sound like a major extension to the welfare system, then that’s probably because they are. Some people were bound to question the point in being productive, when for the same amount of money you could do nothing. Not everyone will feel that way, and some will be upset and stressed about the loss of work, but in terms of bending minds, taking power from people, and getting them used to rules, it is very reminiscent of the 1980s deindustrialisation of Northern England. A period when hopelessness and despair took over from community, self-sufficiency, and a strong work ethic. The schemes may also be the start of something that has been thrown around for several years now and never gained traction – Universal Basic Income. The concept of Universal Basic Income (UBI) is quite simple – every citizen is issued with a basic amount of government fiat currency per year, enough to live on. It never caught on because too many people could see through it – whatever the UBI level is, it would become the new zero, and self-sufficiency and freedom would surely be eroded. To say nothing of the existing gold base supporting more and more newly issued currency units every year.

Where the extra fiat currency has come from to fund all this, it is hard to see any real statistics on. We know that at some point, public borrowing must rise, and indeed, that is being presented through the news to make it palatable to the public, but increasing borrowing takes time. Wherever it came from, the consequence of these policies must be Inflation. Quite simply put, there must be a lot more currency units in circulation than there were a year ago, and even if the majority of those units are in bank accounts right now, doing nothing, at some point, they will begin to enter the market and circulate. At that point, prices must begin to rise. Whether this happens tomorrow or in a few years seems to be the only question.