Red Metal Banter, page-326

Sure, bear with me because this will go on a little bit of a tangent but is very related to RDM. I'll illustrate a number of observations with seemingly unrelated things and show how they are closer than one might think. Keep in mind I have very bearish bias on a number of things but if you agree (or disagree) please feel free to comment and start a discussion. I love talking about this.

The first point I was hinting at earlier is that world economies are f*ed. And I use that word very intentionally. Since USD was removed from gold convertibility the whole world has gone topsy-turvy. To explain it in a nutshell to people who may not be aware, after Nixon suspended the convertibility of dollars into gold because the europeans had clued onto their game, large institutions and banks began to change their behavior.

Now it is important to note that this catalyst was not the only catalyst for this change in behavior and the process began well before (1913) but the story can start here as it was a dramatically "accelerationist" moment. Also of note is that over a long enough time period, no fiat currency has lasted. This is by design. They are intended to inflate at low % every year, to stimulate economies and encourage capital to be invested. People have different opinions on if this is a good or bad thing, but the key point here is that it's by design.

So after 1971 when Nixon closed the gold window, any large players knew the state of the game had changed (as well as some prudent small investors) and began to change their behavior accordingly. It removed true free market price discovery for not just precious metals but also stocks. By removing the limitation on the dollar, government could print more in America. And when they print, they make sure other allied nations print as well. (much more complicated rabbit hole here).

More printing = more inflation as supply and demand changes. If you double the amount of dollars in existence, what required 1 dollar yesterday should now be worth 2 dollars according to supply and demand. The devaluation of the dollar de-coupled the government from responsible fiscal policy, which allowed them to pursue a bunch of legislation that resulted in cause and effect where companies began offshoring (to make more money since it was cheaper). This de-industrialized the west, built up china, japan and south east asia (there are actually separate stories here which are very interesting on this point) and moved western stock markets (and economies) to a more financialized model.

The west in it's complete idiocy saw no problem with this and this is why you have things such as the dot com bubble, 2008 and the 2019 repo loan crisis. Bubbles occur naturally as part of human nature cycles....but they are substantially magnified when central bank interference is involved. The massive amount of quantitative easing is responsible for the inflation in all asset prices as the money flows through the system. Houses, stocks, precious metals...they all adjust to the devaluation of the dollar.

Inflation statistics are manipulated because they go off the basket of goods and household items. Agricultural output has spiked due to technological advancement and fridges/washing machines have become cheaper due to offshoring and tech improvements. If inflation was measured according to housing as an example (since we all need to live in one) you would see the true devaluation figure far more accurately.

So why mention all of this? Because all modern economies are built on the same house of cards. They are all massively debt fuelled (china especially) and have serious cracks which threaten to undermine everything due to something called contagion. If one thing fails, another thing which relied on that could fail and you see where this ends up.



This is a fantastic visual representation of how f*ed everything is. These derivatives and the corporate debt are not repayable without an insane economic restructuring. You have the same asset pledged 10 times over. Absolute insanity to any rational person. So why has it not all melted down yet? Because there's an expectation the government will always step in. And to be fair, that's true. The government has to step in now for it's own survival.

But no-one's thinking about what happens if they CAN'T.

(part 2 below)