The Sauds, The Dollar and Income Inequality

Please be sure to read this free, public post.

41
Wed, Apr 24, 2019 - 10:13am

So far, there's not much going on today with an absence of economic datapoints and other news. So let's take the day to discuss two other items that have been on my mind recently.

As I type, we've (mostly) avoided the 8:30 Comex beatdown. I say "mostly" because the usual selling was still there...just not as overwhelming as it has often been over the last two weeks.

So with everything (mostly) stable, today seems like a good day to prompt a discussion of two things that have been on my mind quite a bit lately.

First, here's an item that received some news coverage last week...but not much. The US has been assisting the Sauds in their war against Yemen through the supply of bombs and materiel as well as aerial refueling for their warplanes. Some place the Yemeni death toll of this war as high as 70,000 with images of the war-ravaged and famine-stricken country easily found on the internet.

Two weeks ago, both houses of the US Congress passed a War Powers Resolution that, by invoking the War Powers Act, aimed to limit future US involvement in assisting the Sauds. Trump vetoed this resolution, effectively killing it unless Congress can muster the 2/3 votes to override the veto. https://www.politico.com/story/2019/04/16/trump-vetoes-resolution-yemen-...

Now why would Trump (and ALL other US presidents!) seemingly support the Sauds at all costs...regardless of their internal and external policies? By the way, did you see this story yesterday? https://www.cnn.com/2019/04/23/middleeast/saudi-executions-terror-intl/i...

The "traditional" talking point is that "Saudi Arabia is a key ally in the region" as they are aligned against the Great Satan of Iran...blah, blah, blah. Instead and FAR MORE IMPORTANT is the Saudi protection and control of the petrodollar system, and this is the key, primary rationale behind US Middle East policy.

The article below is from April 4 and we referenced it at the time. However, it's worth linking again in light of these recent events. Here's the link from Reuters but below are the key (and very rarely stated) paragraphs. https://www.reuters.com/article/us-saudi-usa-oil-exclusive/exclusive-sau...

Simply put: The U.S. will always blindly support the Saudis as their participation in the Petrodollar Recycling Scheme is the key linchpin in maintaining the US$ as the global reserve currency. Period. End of story. https://www.investopedia.com/articles/forex/072915/how-petrodollars-affe...

The second item worth discussing was brought to my attention again this morning through Twitter where I found this NYT opinion piece from the esteemed Nobel laureate, Joe Stiglitz. Here the buffoonish "economist" attempts to make the point that income inequality flows from the misgivings of capitalism. What a quaint, little thought. https://www.nytimes.com/2019/04/19/opinion/sunday/progressive-capitalism...

Instead, the current state of income and wealth inequality is simply a by-product of our corrupt monetary system...where the monopolistic control of the money supply by The Fed and their Banks is at the root of the problem.

As you can see and read below, prosperity across income groups was growing steadily until Nixon closed the gold window in 1971, effectively ending the monetary stability of the sound money, Bretton Woods system. Almost as soon as unlimited fiat creation became the new normal, wealth and income disparity began to grow.

Current politicians like to blame each other for this dire situation. Instead, the blame lies with ALL of them AND their central bank enablers.

You may be asking yourself, what do these two issues have to do with the price of gold and why are they being discussed on a precious metals website? Well, if you have to ask yourself that, then I invite you to think more deeply about these subjects and then be sure to freely participate in what I hope will be a lively discussion below.

As I close, I now have $1274 and $14.82. Go make it a great day!

TF

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  41 Comments

matt_
Apr 24, 2019 - 2:32pm

S&P 500 overbought RSI

The RSI for the S&P 500 is about 72 right now. The last time the RSI was this high was last August. There is a combination of overbought RSI and the resistance at the old highs from last September. The market looks like it is due for a pullback.

I wish I had gambling money to short the market, but I spent it all on platinum.

Angry Chef
Apr 24, 2019 - 2:48pm
RickshawETF -SilverIsMoney-
Apr 24, 2019 - 3:23pm

Solutions

Here's my two cents . . .

1. Bring back the Glass-Steagall Act -- Let the banksters/criminals play with their own money.

2. Close the revolving door -- Any person serving in government, once leaving, must wait 5 years before going to work for any entity they may have supervised or regulated.

3. Prevent Congress people from insider trading.

4. No "military actions" by executive order -- all U.S. troops (or advisors) on the ground must be authorized by Congress.

5. Repeal Citizens United (maybe capped expenditures by candidates?)

6. Abolish the Fed

7. Authorize government agencies to negotiate with drug companies for the best prices -- (The government is not allowed to negotiate prices for Medicare Part D drugs because it is against the law!).

8. Make gold and silver money again (at least not subject to capital gains).

canary
Apr 24, 2019 - 3:31pm

USD

The commercials have been on the short side for a long time...if that means anything?

renozep canary
Apr 24, 2019 - 3:43pm

Is the Jackass Blow-Off top starting?

Are we seeing the start of the blow-off top in the "market" and the dollar that Jim Willie has been predicting for years? Unfortunately most folks are not even aware of PM's as an alternative to the "market" or the dollar. They'll figure it out eventually- but too late for most. A big "tell" will be when the membership of TFMR goes parabolic.

Joseph Warren
Apr 24, 2019 - 4:15pm

SOLUTIONS- by G. Edward Griffin

Very good presentation of solutions by the author of ‘The Creature from Jekyll Island’ :

An Idea Whose Time Has Come - G. Edward Griffin - Freedom Force International - Full - YouTube.flv
Libero RickshawETF
Apr 24, 2019 - 4:30pm

Ditto what rickshaw said

But too common sensical.

But do not see the threat of "free stuff" because I've paid into social security and medicare just about all my life. I WILL NOT let ANYONE reduce these.

matt_ Libero
Apr 24, 2019 - 5:17pm

You have been duped

You have not paid into anything, and you don't own that money any longer. FICA is just more taxes to pay for government spending on whatever it wants.

Did you believe Al Gore when he talked about the social security lockbox? Well, it was a lie.

MoonShiv -SilverIsMoney-
Apr 24, 2019 - 5:39pm

MOAR solutions?

Well, here's mine:

1. Abolish the FED and go back to constitutional money (G +S)

2. Every person that stands for election to any public office:

2.1 Has to pass a special test on the US constitution

2.2 Will be removed from office immediately, if a recall signature effort by citizens turns up 1 vote greater than half the vote margin with which that politician won.

2.3 The salary and benefits of every electoral office will be the exact average of the salary and benefits of that politician's constituency (for president, it will be national avg, for senators, half the state average)

3. Abolish all 3 letter wasteful/porn-browsing/deepstate agencies. Federal govt. should only consist of Executive, legislative and judicial branches.

4. Federal govt. will only be responsible for national DEFENSE (NOT offense) and the judicial system and get out of everything else - nothing else.

5. Every bill passed by the legislative branch (house+senate) has to pass through a constitutional check - send it to the supreme court which will then say if that law follows the constitution and only then will the bill go to the President for signing.

If these things are done, watch how all your corruption, deep state, bullshit laws, insider trading, fascism, wars (at least offensive), inequality, inflation (i.e. dollar losing value & constant need to raise minimum wages & goods prices to deal with this bloody inflation) and every other sh*t that ails this nation/world will VANISH.

The founding fathers of the US were GODS, if I may say so. Oh, by the way, I am an immigrant from a third world country, now a naturalized citizen and I still maintain that I immigrated here to be in the country that one of my GOD'S created (Sir. Thomas Jefferson).

Libero matt_
Apr 24, 2019 - 7:21pm

Matt, whatever it takes

duped or not. No one should let "them" off the hook. There is a social and generational contract to provide what has been promised in social security and medicare health benefits. Hey, if trump has to give up his gold toilet seat, so be it. No new mercedes for you!

And that is what should happen. Don't settle for less.

zman
Apr 24, 2019 - 11:25pm

It's tax and fiscal policy, not monetary

I really wish people in this sector would stop blaming interest rate "policy" for things like wealth and income inequality. When did the inequality really start into high gear? Reagan's tax cuts for the wealthy, globalization (sending jobs out of the US) and then opening the borders for cheap illegal immigration. All of those policies are deflationary in nature- when did the bond bull market start? At the same time these policies were implemented.

Deflationary polices, naturally lower interest rates and wealth inequality ALL are connected, there is no manipulation of interest rates, just manipulated policies which drive rates lower.

What would happen IF instead of giving the massive corporate tax cut to companies that will never invest in the real economy, but instead give the same tax cut to the middle class in the form of federal, state and payroll tax cuts? It would stimulate the economy, cause interest rates to move higher and also reduce wealth inequality, The Elite will never allow this to happen.

In fact the opposite is going to happen, we're going to see even lower bond yields in the next few years, lower than July of 2016. How does this happen? Massive cuts of Medicare, SS and other social programs. You see, it will be fiscal policy that drives interest rates even lower, not monetary policy.

The reason why gold trades at 1275 is because of tax, fiscal and economic policy. The Elite aren't going to inflate the debt away, they're going to deflate the interest payments away. Negative to 0% interest rates need no growth and no inflation, just like the EU and Japan today, that's where the US is headed.

I'm sorry, but there's no infrastructure program, UBI, Medicare for All, economic tariffs or any other "socialist" policy coming to the rescue, not gonna happen. It's going to get very mean and lean in the coming future, and that is not good for any hard asset including gold.

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