Is this the moment we've been waiting for?
I think it is very important we start discussing normalized inflation data. So use the most realistic numbers instead of revalued formulas to favor the US gov’s position. What do 1980 numbers show? http://www.shadowstats.com/alternate_data/inflation-charts shows ~14% inflation. So, 5% yield equals a 9% loss annually.
Here we have it folks. Mayhem is here!! We are not Cuba, we are not Venezuela, we are not even in Zimbabwe. We are in Larry, Curly and Moe's neighborhood. Where are the Keystone Cops? We are in zany town USA. Crime out of control, borders no longer exist, people borrowing money they can't or won't pay back, the pres thinks he's superman, no one is in charge and we all look and see a cartoon instead of the United States. What would our founders say? We have lost our collective minds! I have lived a long time and have never seen this in the world, let alone the country I was born in. Just sayin and I paid $2.20 this past weekend for a nickel Snicker bar! Inflation must really be three or four hundred per cent! Maybe one thousand!
Hola BPR Team -
In the interest of "slowly, then all at once" - is it possible one of you could pen a missive outlining, 𝗶𝗻 𝗴𝗿𝗲𝗮𝘁 𝗱𝗲𝘁𝗮𝗶𝗹, exactly what steps are recommended when the Dow/Gold Ratio hits at or near 5? I've been putting some thought into the immediate aftermath and I have some questions. Using numbers that came from a rectal retrieval, maybe address this hypothetical for starters:
I have 50 oz. of Gold. It hits $7500.00 and the D/GR drops to 5.3. I rush out to my off-book (or official) coin dealer and cash out in preparation of buying the Dow selections you all will surely be suggesting (hopefully ahead of time.) Now I have $375,000.00 of rapidly deteriorating fiat. I need to get that into my brokerage account stat - everybody with me so far?
What do you see as the potential tax implications, not to mention any workarounds for the likely inevitable visit from IRS/DHS/FBI? What do you all recommend as the best, most efficient way to make this key transfer? Is there an alternative route to the obvious one and if so, which is more advantageous? Not looking for personal advice, and surely you all have thought beyond the instant the ratio gets near 5. The 35% PM allocation is great, but when the rubber meets the road and you tell us it's time to go all in with High Cap/Fat Dividend Equities, how precisely do you see the initial stages playing out on an individual level?
I, for one, will appreciate any thought and advice you can give on this dilemma. And it is but the first of several "sticky" circumstances I can envision butting up against once the BPR Dow/Gold Trigger gets pulled. I imagine that having a plan already in place (as much as possible) will be essential for the desired result of your subscribers keeping as much of their wealth as possible when we undertake the Great Switcharoo.
It appears the kitchen is catching fire now and I'd like some sound advice and guidance before the house is fully engulfed in flames...
Holy Cr*p. If even a minority of people understood what the federal government was doing in sneakily "rolling over" bonds that were expiring, there would be a run on the banks. Yesterday.
Following Mark Hoffman's timely reply below, I asked my good friend CGPT v4 to weigh in on the conversation. Here was the reply:
What sort of event might trigger a default on bonds and Treasury bills?
While a default on U.S. bonds and Treasury bills is highly unlikely, there are some hypothetical events or scenarios that could potentially trigger such a situation:
Political gridlock: A failure by the U.S. Congress to raise the debt ceiling, which is a statutory limit on the amount of debt the federal government can issue, could result in a temporary default. If lawmakers are unable to reach an agreement on raising the debt ceiling in a timely manner, the Treasury might not have enough cash on hand to make all of its required payments, including interest and principal payments on bonds.
Severe economic crisis: A catastrophic economic event or crisis, such as a deep recession or depression, could lead to a significant decline in government revenue, making it difficult for the government to meet its debt obligations. In this situation, the U.S. might be forced to default on some of its bonds or Treasury bills.
Hyperinflation: If the U.S. experiences a period of extremely high inflation, the value of the dollar could decrease rapidly, eroding the purchasing power of the currency. In this case, the U.S. might struggle to pay its debt obligations, as its currency becomes essentially worthless.
Major geopolitical event: A large-scale war, natural disaster, or other geopolitical event could severely strain the U.S. government's resources and lead to a default if the country's ability to raise revenue and manage its debt is significantly impaired.
Mismanagement of monetary policy: The Federal Reserve plays a crucial role in managing the U.S. economy, including setting interest rates and controlling the money supply. If the Federal Reserve were to make serious mistakes in managing monetary policy, it could lead to high inflation or other economic issues, potentially resulting in a default.
Loss of reserve currency status: The U.S. dollar is the world's primary reserve currency, which provides the country with significant economic benefits, including lower borrowing costs. If the dollar were to lose its status as the primary reserve currency, it could lead to higher interest rates and a more challenging environment for the U.S. to service its debt, raising the risk of default.
CGPTv4 even does a nice job of covering it's digital as*.
While these scenarios are possible, it's important to emphasize that the probability of a U.S. default remains very low. The U.S. has a strong economy, a history of meeting its debt obligations, and the advantage of issuing debt in its own currency, which provides it with flexibility in managing its debt through monetary policy.
This from (TBP) The Burning Platform
Censoring Social Media to Prevent Bank Runs
And btw, some reader comments are priceless:
Are you signed up with Uber One?
Banks Runs made easy!
Too, the notable quotes change on TBP
One ought never to turn one’s back on a threatened danger and try to run away from it. If you do that, you will double the danger. But if you meet it promptly and without flinching, you will reduce the danger by half. Never run away from anything. Never!
— Winston Churchill
UBS Was Quietly Bailed Out in 2008; Now It’s Getting a $173 Billion Backstop
to Buy Credit Suisse at 82 Cents a Share
By Pam Martens and Russ Martens: March 20, 2023 ~
Yesterday, the Swiss banking giant, UBS, agreed to a shotgun wedding with its
collapsing long-time Swiss rival, Credit Suisse. Switzerland has committed
$173 billion in loans and guarantees to the combined firm.
A key player in this deal was the central bank of Switzerland, the Swiss
Words and acronyms NOT in the vocabulary of the general populace of taxpayers:
▫️FRBNY [the Federal Reserve Bank of New York]
▫️SPV [Special Purpose Vehicle]
▫️Swiss regulator, FINMA
▫️Credit Suisse convertible bond, known as AT1
▫️AT1s are officially called Contingent Convertible Bonds or CoCos
▫️Global Systemically Important Banks (G-SIBs) ....and there’s are 30 of them...cannot rattle of those bank names
▫️Derivatives ...not a substitute for a grilled steak seasoning is it?
◾️Credit Suisse is also interconnected via derivatives to the mega banks on Wall Street.
I wonder, what constitutes a TBTF Bank.
Lets check to see. Oh never mind, that’s a mind numbing exercise in futility - masochists can look here - https://wallstreetonparade.com/9426-2/
Hey btw, the WSJ found a really big bank that’s completely and totally on top of its banksy game:
JPMorgan Chase owned bags of material kept in a Dutch warehouse that were supposed to contain nickel but turned out to be full of stones, people familiar with the matter said.
The London Metal Exchange said last week that sacks thought to hold 54 metric tons of nickel in an unnamed warehouse had failed to comply with its standards. The bags were in a shed in the Dutch port city of Rotterdam, The Wall Street Journal and other outlets reported. The problem: They contained stones instead of a silvery metal used in steel and electric-vehicle batteries.
Source Attribution - https://www.wsj.com/livecoverage/stock-market-news-today-03-20-2023/card/it-turns-out-that-jpmorgan-bought-the-nickel-that-turned-out-to-be-stones-whWn9TqZaksdTPcGyyAi
Todays subtitle: Is this the moment we've been waiting for? As usual Bill, good reading. Thank you.
Also Bill, thank you and your assembled team - Dan Denning, Tom Dyson, Byron King and Joel Bowman. All fine enablers. S.W.A.N. enablers, which is a good thing. There are plenty of other assorted aggravators to contend with.
“The bank is something more than men, I tell you. It’s the monster. Men made it, but they can’t control it.” – John Steinbeck, The Grapes of Wrath
Thank you Bill , good reading today your essaie ...
Still think that next step will be a big deflation coming , JP will cut rates and Wall-street will have what it wishes for rate cut and a bonus a huge recession , always come tougher Fed rate cut and recession , big one ... then we will see QE as never seen with inflation going back to double digit , usd dollar will go to hell and gold to heaven ...
A few hours ago S&P published a bad rating forecast for the Swiss bank UBS, which was forced to "buy" the failing bank "Credit Suisse" last night, and it lowered the rating forecast for UBS from "stable" to "negative". This may create shocks tomorrow in the Swiss bank shares, and in general.
S&P explained the downgrade "We see a substantial execution risk in the integration of Credit Suisse into UBS,"
Source Attribution - https://twitter.com/IanCulley/status/1637914200713338881
Today’s Chart of the Day was shared by Ian Culley (@IanCulley). Gold poked its head above $2,000/oz. today, and closed at its highest level in nearly a year. Ian points out that it’s back above the 2011 highs, which are around $1,925/oz. Gold has looked technically attractive for three years now, as its been in the process of emerging from the mother of all bases.
However, it’s been unable to make a meaningful leg higher despite two prior break out attempts in 2020 & 2022. Will the third time be the charm? The next upside objective will be the 2020/2022 all-time highs, which are around $2,070/oz. Above $2,070/oz is blue-sky territory for Gold, meaning there’s no price memory to prevent it from making a new leg higher.
Source Attribution - email@example.com
I think it’s important to draw a distinction between consumer price and asset price inflation. CPI is most probably understated at 7% but not convinced assets in general (apart from gold) are going up at the same rate. I can not see how speculators and borrowers can still earn a net 2% with interest rates at close to 5% and rising... except for very sophisticated money dealers.
I want to change ALL of my worth to gold and some silver. Is there an institution that I can change my dollars to gold and have way that I can write a check like from a bank check from the gold/silver
I have not researched this but I trust the source until proven differently.
The Swiss government forced a on UBS bank the acquisition of Credit Suisse bank for $3.3B. The past weekend proved to the shareholders of both banks that the Swiss government is NOT interested in their opinion or approval. The Saudi central bank just erased $25B from its worth due to its exposure to the losses of Credit Suisse. A major financial storm is ahead of us!
Okay, where do you go to get a return of more than 7%?
Why didn’t these banks with fed bonds underwater go to the Fed open market window for a loan using them as collateral?