The Monster in De-basement, Part Two

It’s OK: the image of the monster in the basement is supposed to scare you. But it is not supposed to scare you into inaction. If you know the monster is there, it would be better to take some serious weaponry or power tools, not just a flashlight. “Be prepared”, as the boy scouts used to say.

We first warned you of the monster back in October 2020, with some earlier warnings in February 2020 and May 2020. For those who paid attention to the warnings, and took appropriate action, you are most probably in a good position already. Feel free to pass this article onto others.

The COVID19 bogeyman is slowly being wiped out, but the cleanup will take a long time. Stimulus funds and rampant dollar-printing by central banks have seen outcomes that would have seemed incredible just one year ago.

M2 money supply shows that 25% of all US dollars were created in the past year. For every four dollars you used to have, they just printed one more. Guess what will happen to your purchasing power? If the fiat currency supply has increased by 25%, guess how much the cost of your groceries will rise?

The Federal Reserve continues to add $120 billion per month to its balance sheet. US government spending recently hit $32 Trillion. There is no end in sight to this reckless printing and wanton spending.

After languishing for months, oil, copper, silver and coin have taken off; scarce commodities are now up around 50% in price for the year. Prices for bread have seen Real World Inflation increases of 14.4%; milk is up 6.6%, ground beef is up 5.1% and the cost of a base model bicycle is up over 39%. Have you noticed the prices rising around you? If not, just wait…

The banks are paying negligible (or negative) interest. Ten year US government bonds pay a minuscule 1%, with two-year bonds paying 0.11%. Despite a perceived inflation rate of over 4–6%, the government only admits that “official” inflation is around 2%. But even with 2% inflation and 1% on earnings, your money is going backwards. That is assuming zero tax, which further erodes your already minuscule (or negative) earnings.

If you have read the previous articles on de-basement, you would know that a government debasing their currency is not a new thing. We saw it 1000 years ago in China, a few centuries ago in England, a hundred years ago in Germany, and several times in the past few decades (Venezuela, Chile, Argentina, Zimbabwe). In the vast majority of cases, anyone who earned, owned or stored paper currency saw their wealth wiped out. Those who earned, owned or stored scarce commodities became wealthier.

Learn the lessons of history and be prepared. Recently we have seen many billionaires and billion-dollar companies putting large chunks of their “cash reserves” into scarce commodities such as gold and bitcoin. The writing is on the wall, and has been for some time. Dollars are dying. Debasement has a monster. If you are earning, holding or hoarding paper dollars, it is time to “get out”.