Nuff Confetti
“Democratic leaders will realize that they are only easily supported when there is a war that the people can rally behind. And so the democratic leaders will unnecessarily become involved in violent affairs, creating wars to distract the people. To ensure their power, the leaders will create laws to bolster their position. The rulers will impose heavy taxes against the commoners to ensure they are unable or unwilling to fight back. And any who do oppose the leaders will be labelled as an enemy and persecuted as a spy.”
Plato, The Republic, book VIII
Long-time readers of these pages know we’ve often “discussed” the end game of the Global (led by US, EU, Japan) Central bank policy response to any and all problems of an economic, systemic or social nature with unchecked money printing.
We’ve often pondered what the response will be to the inevitable social crisis inflation will inflict on the peoples of the world? If you guessed more of the same before an inevitable but possibly violent change you’re closer than ever to finding out.
We’ve always been cynical enough to believe that politicians and unelected beaurocrats of “The West” would combat the inflation problem with raising interest rates to appear to be doing “something” whilst continuing with the same inflationary policies that got us in this predicament.
Seriously, like this from Bloomberg this evening: “on Tuesday European stocks and US equity futures rose as governments attempted to blunt the growing energy crisis by injecting tens of billions in fiscal stimulus to offset soaring energy prices and undoing central bank attempts to crush demand with tighter financial conditions”, or from Blomberg again, “Germany takes aim at cost of living crisis with €65Billion living crisis assistance bill”………. seriously, this is not a joke, it’s not made up, it’s the end of the road.
In terms of combating inflation, have you heard or read, anywhere, anything about reducing the size of government? Particularly in the US and Europe. We’ll just focus a couple of paragraphs on the US for now, as the USD, FOR NOW, still holds onto (by a thread and 11 aircraft carriers) reserve currency status.
How about this for one .gov “issue” below from 2021. Imagine what the reality of 2022 looks like (this leaves a lot out but you get the picture).
On the basis that the US has created, out of thin air, more USD over the last 2 years than the previous 70, it should come as no surprise that the US just threw another 40 BILLION (up over 200B now) at the Ukraine this week. With these sort of handouts, why would the Ukraine politicians ever want to settle? Someone’s making a fortune!!
However, the main issue for the rest of the world is not US domestic schtick, it is the MASSIVE INFLATION the US has/is exporting to the rest of the globe and the consequences it has to Emerging Market economies.
To understand this point above is to understand the depth and seriousness of potential “blowback” to the US $ and its status as global reserve currency.
If one doesn’t want to understand the mechanics of how a surging USD creates extreme inflationary social stress in emerging markets then you’ll just have to wait for the debrief in a couple of months, well done on getting this far.
Before we move onto the European contribution to the current geopolitical quagmire, there has been one more development in the US over the last week worthy of commentary.
This speech:
Which looks a little like this:
In this twenty five minute POTUS “speech” from last week, the word “Democracy” and the defence of, was mentioned no less than 25 times. The US is a Republic and a Democracy by the way, where the people have the ultimate say!!! LOL.
If you were to listen to the contents of the above-mentioned speech it’s hard to understand how threatening half the US population with the strong arm of the state for opposing or questioning the current administration’s efforts in freedom tightening can be productive in a nation with a history like the US.
It’s also interesting that the place of choice for Presidents Binden’s call to “be done with all opposition to his democracy” was the Philadelphian location of the original declaration of independence by the founding fathers in 1776. Look it up.
While you are there, check the “freedoms” the people were seeking at the time. We think Freedoms like the addition of 87,000 new IRS (tax) “agents”, as announced by the Biden admin last week, might well have pushed more than tea into the Boston harbour in 1773.
Incessant money printing is but one of the two major contributing factors to the geopolitical breaking point upon us.
The second, energy, is more about the EU contribution to the intensification of geopolitical change and has been coming for a long time. There is nothing like combining inflationary cost pressure with a massive increase in energy costs, A PERFECT STORM for social and political backlash. Even in the UK, the rise in energy costs is extraordinary.
But, as usual for the EU, its Germany where the real action is. Germany, an actual economic production powerhouse that can’t power their own house! Germany, a proud country about to face the reality of being sold down the EU political river by its left leadership. Do you think it is Putin’s fault that Germans aggressively swallowed “Green Pills” at the same time as trusting their leaders distain for Nuclear?
For a country so steeped in engineering and innovation to shutter their Nuclear Power sources without a viable alternate is simply unbelievable.
In days where “fail safe” small scale reactors operate on the high seas and jurisdictions all over the world but not in Germany should have the German people considering the guidance they’ve had from their political leaders over the years.
It’s pure politics and blowback has commenced.
If there is one country in Europe that Brussels fears moving to the political right, its Germany, as the history books show.
Unfortunately, it’s not just Germany feeling like it’s been completely duped by Green politics! A short glance at others in the region should further alarm investors buying the EU Green dream.
We couldn’t move on without making some reference to this:
These words below are not ours and we can’t remember where we collected them but it resonated well.
- Nothing about Western politicians’ embrace of the World Economic Forum’s “Great Reset” or “Build Back Better” paradigms protects property rights or liberty in the slightest. The WEF’s agenda promotes radically anti-liberal programs… [that] will smother human innovation by first depriving Westerners of their freedoms.
- Wealthy free nations are a threat to the WEF’s New World Order. If censorship must be embraced to control the “narrative,” then so be it. If citizens must be denied freedom of movement under the guise of a “health emergency,” no big deal. If private bank accounts must be seized to intimidate protesters, then such threats are the price for ensuring compliance. In this way, the WEF’s plans for a controlled economy intentionally reverse centuries of liberal progress. Political leaders today are dragging the West into the past.
Europe, the whatever it takes Europe, is about to experience a force of change capable of overwhelming the status quo, long time coming!!
In summary, we’ve never seen or felt such a strong undercurrent of immanent change. Those that followed our musings on different platforms through 2008/09 know we may have been early in 08 whilst others were whistling to the happy tunes of Mainstream nonsense but, in the end, history tells the story.
We can’t help but sense some similarities but for one big difference.
The difference is, whilst the 2008 situation was largely financial, the situation know is major league geopolitical, on the verge of change.
In our view the change will come by way of international rejection of the USD dollar in energy pricing, resulting in a possible demise of the reserve currency.
This will alleviate inflationary pressures for the most vulnerable but possibly result in severe financial disruption for “others”.
How might this happen? Recent military co-operation treaties between Saudi Arabia and Russia should have raised more eyebrows.
What might life look like for the US should the Saudi’s announce their right to accept payment for their oil in any currency they wish?
Again, you may not have to wait long to find out. Luck will favour the prepared, as usual. Exposure to Gold, Cash and Energy may protect portfolio’s and, as usual, high quality cash flow is valuable!!
Yes, this may happen.
But this is happening as it has for the last xx years.
From the Chicago Tribune of 1934.
One more thing, don’t think that we don’t understand that decarbonization represents one of the greatest risk-adjusted investment opportunities of our lifetime.
Uranium should/will be discussed further in this context.
For now, let’s focus on getting through the next few months with minimum damage.
Unless you think we can print our way out of this one too!!
Peace.
