Jamie's Judgement Day?
Are we being "dragged towards war and bankruptcy and socialism all at once"?
Last week, Jamie Dimon (one of the few sane voices left on Wall Street) warned of 8% interest rates coming soon to a bank near you. Lenders were listening. Mortgage rates are already back up around 7% and the 10-year treasury yield is rising again.
“Huge fiscal spending, the trillions needed each year for the green economy, the remilitarization of the world and the restructuring of global trade”—said the JP Morgan CEO—“all are inflationary.”1
Indeed, they are. “I am very pessimistic about the future of the country,” said then-Sen. Robert Taft on the eve of a world war before we started numbering them, “we are certainly being dragged towards war and bankruptcy and socialism all at once."2
The Ohioan, known as Mr. Republican, was prophetic. It wasn’t until post-WWII federal spending was dramatically slashed from over 40% of GDP to under 9% by the end of the 1940s that the economy truly recovered and finally grew out of the Great Depression.3
But the Great Society big spenders came roaring back and by the inflationary seventies, markets ‘stagnated’ and precious metals soared. It took a commitment to a stable dollar from Ronald Reagan and Paul Volcker to settle things down in the eighties.
But today, we’re going in the exact opposite direction. We are awash in $2 trillion dollar deficits and a national debt the size of our GDP at $33 trillion.4 The Fed is still planning on three easy-money rate cuts this year and may actually be pausing its plan to wind down trillions on its balance sheet.5
So, once again, the price of gold has surged amid rising prices and geopolitical tensions.
In fact, it’s headed for $2400/t.oz (as you can see from the above chart from tradingeconomics.com) because precious metals remain the ultimate hedge against the most destabilizing of environments. That’s why gold did very well during the 2008 financial meltdown and the Covid outbreak in 2020 as well.
But today’s crises may make those events look like a walk in the park. The fact is our willingness to monetize the greatest post-COVID spending spree in our nation’s history has us flirting with a sovereign debt crisis, usually reserved for banana republics. And now, we may be on the verge of war again and no one’s talking about cutting spending.
Over the last few decades, I’ve been asked many times to represent a gold company and up until now I’ve declined. But the value of the dollar is threatened more so than at any time in my adult political life, including the economic chaos of the seventies.
That’s why I own gold and also why I’ve agreed to represent Revelation Gold as a spokesperson and affiliate. Precious metals remain a vital hedge against runaway inflation and I trust the way Revelation Gold does business with a faith-based approach. Of course, this is not financial advice, which I do not give and commodity prices can be volatile.
But you don’t invest in precious metals for tomorrow, you invest for a hedge against inflation over the long term. If you’d like more information on a self-directed Gold IRA that combines crucial tax advantages with the intrinsic value of gold, simply click here.
As Mr. Dimon warns, “Rates have been extremely low for a long time, and it’s hard to know how many investors and companies are truly prepared for a higher rate environment.”6
https://www.wsj.com/finance/jamie-dimon-warns-u-s-might-face-interest-rate-spike-83789da7?st=j0l491r2n1pdgrr&reflink=article_copyURL_share
https://imprimis.hillsdale.edu/wp-content/uploads/2016/11/World-War-II-The-Great-Liberal-War-May
https://www.mercatus.org/research/working-papers/us-postwar-miracle
https://www.cbo.gov/publication/58995
https://www.wsj.com/economy/central-banking/federal-reserve-minutes-interest-rate-cuts-4f17489f?st=pwr4jr8am9a3pnn&reflink=desktopwebshare_permalink
https://www.wsj.com/finance/jamie-dimon-warns-u-s-might-face-interest-rate-spike-83789da7?st=j0l491r2n1pdgrr&reflink=article_copyURL_share.
Well, I'm a glass half-empty kind of guy and I believe that even if I did own gold I wouldn't be able to get to it unless it was in my safe. But even then who would give me market rate for it if I tried to sell it? I don't know. I think I would rather have lead (in the form of bullets) for trade.
Way to go Jason. Sorry about the bad snaps.