Inflation and the Price Stability Paradox.

Monday June 12 2023 Monaco 64 home of alternative economics and contrarian views so this week we've got a couple of important events for the markets and why do I uh air quote the important uh events well because I think it's just noise we need to look at the bigger picture and why their current system we have of Central Banking of fiat currency of what they call

Price stability actually creates even more currency the basement or inflation and I'm going to prove that to you today with some historical data before I start I'd like to let you know of a couple of specials uh in the precious metal space first one is from gold Investments they still have the one ounce gold krugerrence on special they're only one percent over spot and it's valid

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account so yeah back to uh inflation CPI and we hear uh Central bankers talking a lot about price stability especially the European Central Bankers it's always their Mantra we want price stability it makes it seem that price stability is a good thing that it keeps the currency steady and stable but I would argue that it keeps the currency uh continually being debased and currency debasement is

what inflation is all about currency debasement is when you inflate the currency and they do do it by creating a FIA currency out of thin air and the central banks are allowed to do that and um it just dilutes all the other currencies uh all the other currency out there that's been created before it's like put water in the putting water in the milk it dilutes

the milk it's like putting water in wine it's like taking the silver out of the Denarius like the Romans used to do it and put base metal but uh deep down uh I I think the free market and sound money is the best way to ensure the stability and um yeah the non-debasement of the currency we need honest weights and measures we need to go back

to a world where money is a weight in grams or ounces or kilos or whatever of course of gold and silver so I'm going to show you um this chart that I saw a few months ago and and I thought it was really interesting and it's actually from the office of national statistics from the UK and it goes back to 1810 and if you look at

the uh fluctuation in the inflation rate as they calculated back in the 19th century it was wild as you can see it was up and down like a yo-yo um and I think the last time that we had this kind of uh yo-yo up and down action was around the time of World War One and towards the end of world war one as you can see

so you'd think well the 19th century the Victorian era must have been a horrible time look at all that fluctuation well despite the fact that we we did have the Central Bank the bank of England back then and I'm not like trying to justify the bank of England I think um central banks they enable uh governments to create a lot of crises Wars and stuff it's

like a an instrument of the globalist but be as it may um in the 19th century uh compared to today uh the the bank of England and even the government they were much more Market oriented so yeah you'd think well what a horrible period but then you know this uh instability and inflation but you look at the uh Bank of England inflation calculator and you look

at the period from 1810 to 1914 uh and uh it shows that uh average inflation was minus 0.4 a year so you'd think wow that was horrible but it wasn't of course because the 19th century was a century of a lot of progress industrialization all the world's fairs and uh yes uh Britannia ruled the waves and even in the United States you had a huge Industrial

Development especially after the Civil War so as you can see the pound became stronger it bought more you only needed six pounds 81 to buy what you um needed 10 pounds back in 1810 in 1914. so what I'm trying to say here is that the market took care of things and uh and it didn't matter because you had sound money sound money was a weight of

gold and the weight of silver the the government couldn't inflate and uh if if the system was inflated one year it would deflate the next year as you can see here so why have we gone from this instability and inflation and long run really uh low or even negative inflation to a period now where we always have high inflation relatively High inflation we never see uh

negative CPI I think the what changed everything was the uh Keynes and fallacy and the two world wars and the Inception of the welfare state uh not just in the UK but also in the United States with a new deal and the goal now is to make sure we didn't have negative CPI or if you want to call it deflation that prices were maintained around two

year or so you got a deflationary period and over time that was a good thing it allowed the market to function to allocate resources and nowadays that's gone out the window and unfortunately uh every country is a Keynesian um Keynesian uh experiment these days government is always supposed to help everyone and everything and I think that's the problem and I've got some data here from the

Minneapolis fed and if you go back to 1943 which is 80 years ago I've counted and you can count in one finger the years that the CPI in the US was negative so it was three times so out of 90 years so this is what I'm trying to say here uh yes we're gonna get CPI tomorrow is supposed to drop from 4.9 or something to 4.1

and everyone's going to cheer and they're going to say oh the fed's got control of inflation but no the fed's job is to inflate uh what the problem they they had is that they they started inflating to too much for people to notice so they need to keep it like at two three percent and people don't notice and they don't complain but at the same time

there the analogy of the Frog they're being boiled to death without knowing it and the FED wants to wants that to stay like that because Central Banking and the fiat currency system is just a great uh wealth extraction mechanism from the general public to the top 0.1 percent I would say to the bankers so and it doesn't really matter as well does it what the FED

does in terms of interest rates I think the majority of people uh surveyed economists surveyed surveyed expect the FED to keep rates unchanged uh on Wednesday uh the 14th and the other thing I would say about the CPI numbers or inflation is that they go in cycles and you can look at it in the 70s how they rose up until 1974 they came off in the

next couple of years from 11.1 to 5.7 so people were probably cheering back then but then they rose again from 1976 to [Music] 1980 from 5.7 to 13.5 so I I think it's far from over this inflationary uh pressure I think the FED has lost control of it and yes it might come off uh in the next few months maybe do four or three percent but

it's set to go back up again because it takes a very long time to to um disinflate and even when they do disciplate they're gonna keep they're going to keep debasing the currency and that's why over the long term there's nothing better to have than real money the money that uh you had in Victorian times in the 19th century up until World War one that was

gold and silver it's uh it wasn't an investment back then it was just money nowadays it's acting as an investment because the fiat currency is so heavily debased so that's what I wanted to talk about and uh I'm gonna recommend a book before we go look at the markets uh for you to understand better um the basics of money and currency and I'd recommended this many

times but hopefully we we keep getting new subscribers and it is and it is what has government done to our money by uh Murray rothbard and you will understand why that they can inflate the system by reading this book and it's not a long book you can get a free pdf which I'll put a link to Below in the description or you can buy the book

as well I'll put a link to themes.org website you could buy it there or you could buy anywhere you want so it's uh 8 24 a.m London time um we're gonna start with the uh price of real money versus Fiat I.E gold and silver we've got uh gold at 1960 that's virtually unchanged the LA the high's been 1962 the low 1954. silver is down 18 cents

at 2410 that's down three quarters of percent uh the the lowesbian 05 and the high 33 uh the stock market futures uh the index Futures uh the Dows up an eighth of a percent uh NASDAQ 100 is up a third and the s p is up a quarter so why why is the stock market still doing relatively well well because the FED has basically stopped uh

QT since February there's been a net uh it stayed pretty much we are pretty much where we were back in the middle or beginning of February in terms of the balance sheet so they're not really um they're not really uh tightening anymore and that's why the stock market is done well uh to the currencies we got Sterling down slightly at 125.70 the euro is unchanged versus

the dollar at 107.50 the dollar is up a bit uh versus the yen 139.50 into the other currencies uh Aussie dollar is up uh slightly at 67.50 the uh dollar is pretty much unchanged versus the Canadian dollar 133 33 and the Kiwi dollar is down 0.2 at 61.19 to the general Commodities we've got WTI Crude down quite a bit here down 1.7 percent just above 69.

uh Brent is down 1.6 at 73.50 uh Platinum is down six bucks at a thousand and five and high grade copper is down 1.2 percent at 374.70 I think there there was some uh Chinese economic data that weren't that good and maybe that's why Commodities have come off a little bit and now let's check up what I think are the most important markets if you want

to know what's going on in the economy and that's the Government Bond markets we're going to start with the UK uh guilt Market the Government Bond Market the two-year yield is uh back above 460 we're at 461. and I think a lot of uh the mortgage lenders of banks are going to increase their rates today and we need to keep an eye on this because if

we break 475 we could see uh the mortgage providers pull a lot of deals even more they they pulled quite a few last week and it's going to get harder and harder for for people who have big mortgages who took it a few years ago and you have to understand in the UK mortgages are mostly like two year and five-year fixed very few there's no such

thing as a 30-year fixed mortgage uh and uh just look at the U US Treasury Market the two-year yield is up three basis points at 463. and the 10-year is up to at 377 but still the the curve is heavily inverted still not just from two to ten but also like from three months to the ten year we are at 5 29 in the three month

and 376. that's a really bad sign uh I I think there will be a recession coming when we go from this inversion to zero that's usually when we aren't the height of a huge crisis or recession so with that I'm going to wish you all a very good day take care bye