 Oh man, great article!
If he had had more time, I wish Gordon would
also have broken out 'credit' into 'reserves' and 'fractional reserve'
banking.
Credit is based on banks lending against a reserve, and they used to
hold T-bills, now they hold pallets of US treasury debt notes otherwise
known as dollars, that have replaced those T-bills due to QE purchases by
the 'Big-Bull' .....the US Federal Reserve....Ben's Ranch.....Yellen's Money Farm.
Fresh Cash, bricked and shrink wrapped on pallets up to the ceilings of
many banks. The thing is, the Fed buying bonds and replacing them with dollars
is effectively a 2 for one deal, because the bond is a debt note, and that is
in effect 'money' but now they've printed the equivalent in cash to pay the banks for
the T-bonds, and the cash is 'money'.
But the banks don't and haven't used a box cutter to cut that shrink wrap! - not yet!
They use the fractional reserve system usually around 10:1, to loan out against their
shrink-wrapped sequestered cash, creating, tah dah: liquidity; credit; debt.
The low interest rate created by the swap is the grease that allows the banks to
pump that juice into the economy.......easy credit, easy debt......negative interest rates
But on a parabolic scale; a geometric curve in debt, because "monetizing" debt means
printing more debt to pay for the credit you just borrowed to create the liquidity.....
Yes, the inflation balloons people's personal and business credit and debt, then when the interest rates
jack up to soak up all those inflated dollars.......when QE starts to rust......who gets their accounts
vacuumed out first to pay back all those inflated dollars.....
You small investor.....you are the first to be Hoovered off the face of the planet.
So, pay down your current debts, sacrifice a few consumer pleasures, and put the
difference into a DCA plan, and Hoover up some of these metals as the prices are now falling!
Will gold kiss and break $1,000, who knows, but dips are a good thing for
disciplined accumulators.
Don't blow the bundle now, prices may fall a lot farther south. But buy some metal now using
a regulated DCA approach, and buy into the dips.
Buy low, sell high. Well, metal is mighty low, and may fall further.
DCA, all the way!
 Commented 3787 days ago |
