The Rest of the Story

Free speech is all very well when a nation is young and prosperous. It’s a different matter when you have $35 trillion of debt... and the worker/dependent ratio turns sour; what to do then?

“The desire for gold is not for the gold. It is for the means of freedom and benefit.” 

—Ralph Waldo Emerson Friday, August 30^th, 2024 

Friday, August 30th, 2024

Bill Bonner, writing today from Poitou, France

Gold is telling its story. Reuters: 

Gold prices gained around 1% on Thursday, fueled by strong expectations of a Federal Reserve rate cut in September with investors focusing on U.S. inflation data for further insights on the potential size of the cut. Spot gold rose 0.9% to $2,524.45 per ounce. 

On the surface, it is a strange time to cut rates. Stocks are at a tippy top — more valuable (nominally) than ever before. At nearly two times GDP, stock market capitalization is flashing a giant ‘SELL’ signal. House prices too are soaring. And total US debt is at $99 trillion — sixty times higher than it was when the country switched to its credit-money system.    

By all measures, the economy suffers from too much credit... not from too little. 

But deeper down, there is a good reason for the Fed to cut rates. With so much debt, it needs inflation. It wants inflation. It must have inflation to ease the debt burden. Otherwise, the bubble economy will deflate and die. 

The dollar has lost 98% of its value since 1971, measured by gold. The big question now is how and when it loses the rest of it. But let us pull back to get a broader view. What is the ‘rest of the story’ that gold will tell? 

Free speech, for example, is all very well when a nation is young and prosperous. It’s a different matter when you have $35 trillion of debt... and the worker/dependent ratio turns sour; what to do then? 

Already, journalists, UN weapons inspectors, writers, activists, former British ambassador Craig Murray, former member of Congress Tulsi Gabbard, and many others report that they are being stopped at airports, visited by the FBI, added to ‘terrorist’ lists. Why? 

For the first time in US history, the young do not expect to be richer than their parents. GDP growth rates hug the floor like victims in a mall shooting. The ratio of workers to retirees began at 41 to 1 in 1945... and now is down to 2.8 to 1. But it’s worse than that.  

There are now 167 million people in the US who don’t work. And guess how many do work? 167 million — almost exactly one worker for each non-worker. US debt service is already costing the nation more than ‘defense’... and will soon rise to more than Social Security payments too.  

Promises can’t be kept. Benefits and services will have to be cut back. How can the elites silence critics and keep the masses in line? 

Inevitably they turn towards ‘hard power’ — lockdowns... censorship... sanctions and bombs.  

The latest from the Wall Street Journal: 

France’s arrest of Telegram CEO Pavel Durov over the weekend has made the Russian-born entrepreneur a cause célèbre for free speech. 

Paris prosecutors say Mr. Durov was detained in relation to an investigation into criminal activity on the platform, including child pornography, drug trafficking, money laundering and its refusal to cooperate with law enforcement. Those are serious offenses if true. 

But many suspect this is merely a pretext because Europe is also imposing speech controls on other media platforms.  

Elon Musk might want to watch out too. Thierry Breton, European Commissioner, made a threat to Musk, just before his live interview with Donald Trump. The WSJ: 

“Amplification of harmful content in connection with relevant events, including live streaming” might “generate detrimental effects on civic discourse and public security,” he warned. He added… that regulators will “not hesitate to make full use of our toolbox... should it be warranted to protect EU citizens from serious harm.” 

The WSJ comments, earnestly: 

Trust in government is declining in democracies around the world, and leaders don’t help themselves or their countries when they blur lines between criminal conduct and speech they find offensive. 

But the megapolitics of the situation point to a different interpretation. Suppressing challenging ideas and opinions actually does help leaders stay in control. Faced with fines or jail time, intelligent people keep their mouths shut.  

Apparently, France intends to give Durov the Assange treatment. Julian Assange had been hiding out or in jail for the last 14 years before he was sent back to Australia recently under a plea deal. His crime? As founder of WikiLeaks, Assange gave whistle-blowers a place to blow their whistles. 

What next?  

We don’t know. But our guess is that gold’s tale will be more like 1984 than The Sound of Music. Sure to be a page-turner. 

Regards, 

Bill Bonner