If We Have a Strong Economy, Why Are Americans Struggling?

If We Have a Strong Economy, Why Are Americans Struggling?

By Schiff Gold

Posted on January 17, 2025

The 10-year treasury yield rocketed up to near 5%, and analysts say it’s because the economy is strong despite higher inflation. But if the economy is so strong, why are Americans so indebted, cash-poor, and desperate?

10-Year Treasury Yields

Source

The recent spike in 10-year yields has been explained away by many as the result of a strong economy, but they fail to mention that high inflation makes the 10-year yield harder to contain. High 10-year yields support higher rates for things like car loans and mortgages, and with the world still under the inflationary spell of COVID-era QE and free money “stimulus,” the only answer may be—you guessed it—more free money QE to “stimulate” an economy that’s already stuck in an infinite loop of inflation. As Peter Schiff said recently:

“I think that they’ve already lost control of the long end of the bond market…the Fed is going to be pressured to try to lower long-term rates, and the only way it would be able to do that is by buying the long term bonds, and the only way to get the money to do that is to print it.”

But not even the Fed has a clue for how it would deal with a stagnation scenario.

“It was almost humorous and even it got a laugh out of Powell. A reporter asked him at the last press conference, ‘What’s your plan for stagflation?’ And he laughed and says, ‘Our plan for stagnation is that we’re not going to have it.’”

But we already do. For now. markets are also still trying to figure out how to react to Trump’s win, and uncertainty breeds volatility. So, high inflation coupled with uncertainty and “strong” economic data are the three factors being attributed to the spike in yields. The inflation part is partially right; the only problem is that it doesn’t go far enough, because inflation is actually much worse than what’s being reported. The other problem is that the “strong jobs data” being partially blamed for the rise in yields is never really as strong as what gets reported, as the jobs reports and other economic data are unreliable and designed to paint as rosy a picture as possible.

As Treasury yields keep rising, mortgage rates keep going up, and basic needs keep getting more expensive, 2025 is already shaping up to be a marvel of stagflationary chaos. As predicted, the bond market and broader economy are getting spooky, and Central Banks will keep buying gold to protect themselves from the same problems that government and central bank interventions create.

The question is, how many Americans will protect themselves? The answer is very few, as the average American has hardly any money saved and is living paycheck-to-paycheck while becoming increasingly over-indebted. After all, when economies are extremely weak or extremely strong, they will always be what decides elections even if the root causes go far deeper than any one president, which they always do.

But when Americans are struggling, seeing drastic price increases, and watching with enraged awe as their government continues donating taxpayer money to proxy wars in Ukraine and Israel as American cities flood, burn, and lose their critical infrastructure, they’re going to vote for the other candidate. So, while Trump signed the inflationary COVID stimulus checks, he was able to convince voters even after losing in 2020 that he should be given another chance after the economic deterioration of the last four years..

Whether or not Trumponomics itself ends up being inflationary, central bank monetary policy will always revert back to the only real tool in its toolbox, which is printing money. Whether or not DOGE, tariffs, and other promises materialize, the result of statist intervention to bring down prices is almost always, ironically enough, higher prices. Even if the intervention causes costs to go down in one place, they generally go up somewhere else.

That’s because there are no free lunches in economics, no matter what central bankers may say.

Schiff Gold

• https://www.schiffgold.com/commentaries/if-we-have-a-strong-economy-why-are-americans-struggling

The Never-Ending War On Cash

The Never-Ending War On Cash

By Schiff Gold

Posted on January 23, 2024

-

In the last few decades, there has been a global shift towards a “cashless world,” a trend that continues to shape financial autonomy. Physical currency is becoming increasingly rare as the majority of the world’s money supply exists in electronic form. Governments and financial institutions are actively promoting a cashless society, raising concerns about individual financial freedom.

The Federal Reserve’s last annual update on physical currency in circulation reported about 2.2 trillion dollars in physical cash supply. This includes physical coins (dimes, quarters, dollars) and green Federal Reserve notes. Nevertheless, there has been a rapid shift towards electronic funds. In the current era, the total global money supply is predominantly composed of electronic funds, with physical currency representing a diminishing percentage.

The concept of Central Bank Digital Currencies (CBDC) in the last year has gained substantial prominence globally. IMF Director Kistalina Georgieva noted in her speech last year that CBDCs have already been introduced in The Bahamas, Jamaica, and Nigeria, with over 100 additional countries (including the United States) currently in the exploratory phase.

The push towards a cashless society is often justified on grounds of enhanced security, with claims that electronic transactions deter terrorism, money laundering, and counterfeiting.

However, upon closer examination, it becomes apparent that the primary objective is an attempt to ‘bar the doors’ and keep assets within the US Financial System. Reduced reliance on physical cash facilitates increased monitoring and taxation of financial transactions, aligning with the government’s and central planners’ interests.

Interestingly, even with the diminishing purchasing power of the US dollar, the face value of Federal Reserve notes has also been decreasing. Today, the highest denomination note produced by the Federal Reserve is the $100 note. The elimination of higher denominations, such as $500, $1,000, $5,000, and $10,000 notes, began in 1969. Discussions continue, with some advocating for the complete discontinuation of cash.

Governments benefit from a cashless system as it allows for more efficient taxation and central planning, while banks see advantages in increased fees and regulatory power.

A cashless society results in larger bank deposits, contributing to an expansion of the money supply through fractional reserve banking.

The move towards a cashless society raises concerns about individual control over personal wealth.

Governments and large banks are likely to exert increasing pressure to discourage holding liquid wealth outside the banking system.

Acquiring physical cash and precious metals may become more challenging, potentially reaching a point where coins and Federal Reserve notes are no longer considered legal tender.

Contrary to paper currency, the intrinsic value of precious metals, particularly gold and silver, has hardly been impacted by these government decisions. We talk more about this in our Confiscation Con white paper, here.

The use of gold and silver as money is determined ultimately by the free market and the free market alone.

As we continue to move towards a cashless era, it’s wise to contemplate shifting a larger portion of your electronic dollars into physical assets like gold and silver, particularly in anticipation of the impending Central Bank Digital Currency (CBDC). Gold and silver are the best historically reliable assets for safeguarding wealth, offering a prudent strategy to avoid becoming a casualty in the ongoing ‘war on cash.’

Schiff Gold

https://schiffgold.com/commentaries/never-ending-war-on-cash/