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Weldon's Money Monitor: Three Cheers

By is a reflation race, in everything EXCEPT real income and wealth.


Here Here, Three Cheers for John Succo's FINE essay on the currency that I have come to call 'Equity Scrip'.

Indeed, it is a reflation race, in everything EXCEPT real income and wealth. All paper is being monetarily debased, and gold is now appreciating against ALL paper, including foreign currencies and foreign equity scrip and US paper, currency and scrip.

We excerpt a recent issue of Weldon's Money Monitor that speaks to the same secular dynamic discussed so eloquently and convincingly by Mr. Succo:

"We see a macro-twister developing on the horizon, with the secular eco-environmental 'storm-indicators' suggesting fertile ground for a 'Type 7' (NOAA) Twister ranking +5 on the Fujita F-scale.

In other words, a large, damaging storm that reeks havoc in a variety of ways, from hail to wind, one that spends a large percentage of the time "on the ground", and cuts a wide, long path across a great distance.

Let's break it down, noting first the 'twisting' wind, which pushes and pulls from opposite directions, with each side of the 'stretch' intensifying to the point where the macro-fabric begins to 'tear'. We define the twist with:

Money Supply and Credit Creation that is SOARING, globally ...

... against which ...

... 'Real' interest rates are PLUNGING ...

... Consumer sentiment is PLUMMETING ...

... Fiscal deficits are ERUPTING

Indeed, with the Central Banks on 'storm-watch', we wonder when, not if, but when, they decide the winds blowing in the direction of an eco-implosion, become fierce enough to cause them to 'stand-down' from their allegedly hawkish policy stances.

Of course WE note the intensified Fujitsa risk profile posed by the savings-poor, income-reflationless, over-housing-leveraged, US consumer, upon who the entire global economy remains CO-DEPENDENT, ala over-reliance on exports for domestic GDP growth in countries around the globe.

We wonder ... does the Fed, the ECB, the BOJ, the RBA, the PBOC, see ???

We think they DO, and, as we have stated since we started writing a daily macro-missive 15 years ago, the global macro-imbalances intensify, every day, every week, every month, every year, and have been for 35 years.

This ... has NOT changed.

Countries around the world are MORE DEPENDENT THAN EVER on the US consumer.

Now, the US consumer is MORE DEPENDENT THAN EVER, on the value of his home, as relates to his ability to service a RECORD debt obligation load.

This is the point of contact, for the development of the twister.

The RISK, is a global central bank policy error, one that could easily be made given the credibility issues attached to the rise in what we have always termed 'peripheral' inflation.

Indeed, it seems almost unfathomable to consider that the Fed could be approaching the END of a tightening campaign, at the same time Gold is just breaking above $500.

But then again, we have always said, when forced to peer into the debt-deflation abyss, in this case defined by the risk profile we detailed above, central bankers will ALWAYS choose paper-reflation, and monetary debasement, first.

And, we've believed that they would eventually be FORCED to ... and the exact word we have ALWAYS used is ... "acquiesce' ... to higher peripheral prices, and inflation indicators, such as gold.

This is WHY we can suggest, that the Fed might be LESS hawkishly predisposed going forward, DESPITE the fact that Gold is indeed, breaking out to the upside and making new multi-decade price highs above $500.

Yet, in reality, there is MUCH evidence to suggest that global central bankers are, actually, already, on FULL TILT, in terms of erring on the side of easiness, amid an EXPLOSION in money supply and credit creation.

BINGO, and thus gold is only 'reacting' to the underlying secular trend towards intensifying monetary debasement of paper currency values.

This has been our theme for YEARS, and after years of being in the 'darkness', this exact thought process is gaining exposure, daily." ----

Hey John, we could NOT AGREE MORE. We offer the chart below, and the accompanying commentary, also extracted from a recent edition of the Money Monitor:

"Thus, from the top-down macro-secular perspective ... the conflicting mess of diverging winds can be simplified, again, as usual, into one short succinct thought process ... defined by, and defining ...

... an ongoing secular trend encompassing 35 years since the abolishment of the USD-Gold standard, towards monetary debasement of the value of paper currencies, amid ever intensifying global imbalances centering around the US consumer, and now, US housing.

Evidence the simplistic view exhibited in the mega-macro-monthly chart on display below, revealing the secular trend towards debasement of the EUR, a trend that is RE-ACCELERATING." ----

And John, in terms of continuing to err on the side of EASINESS, we observe the evidence shown in the chart below, revealing that when 'adjusted' for the still-low yield on the US Long-Bond, Gold is spiking above "$1000" per ounce (equivalent).

Finally, speaking VOLUMES in support of Mr. Succo's succinct and astute macro-conclusion, we offer the chart on display below, extracted from yet another issue of Weldon's Money Monitor; revealing that Gold AND Stocks are rallying together, on a relative basis as pertains to the STILL DOVISH level of the Long-Bond yield, a RARITY over the last several DECADES, and strongly suggesting that ALL of the stock market's gains are the direct result of monetary debasement of paper currencies, which, with Gold at 500 USD, includes the US currency. Thus, ALSO includes the US paper Equity Scrip market.

SO, John, here is MY question:

How long until the Fed is forced to 'repurchase' EVERY PIECE of paper the US Treasury has sold to the globe, and what would be the catalyst for such a purge, leading to a final 'crash-and-burn' scenario in terms of the incestuous, co-dependent global relationships that have 'fed-off' the intensified imbalances created over the last 35 years ???

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