MARKET NEWS / MCALVANY RECAP / MARKET NEWS

Choose: Hated Truth or Loved Fiction

MARKET NEWS / MCALVANY RECAP / MARKET NEWS
McAlvany Recap • May 01 2023
Choose: Hated Truth or Loved Fiction
MPM Posted on May 1, 2023

In the long history of empires, there have typically been detailed accounts of the decline and fall of the center. Greece, Rome, Byzantium, France, Turkey, Spain, the Netherlands, Britain, and others. Typically the empire grows over time, peaks in strength and influence, begins a period of decline, and then collapses from either internal or external causes—or both.

Although US citizens ironically speak the truth when they say, “this time is different,” the situation is different only in details, not in form. The US is governed differently and has established a different kind of empire than its predecessors (trade rather than governance), but it seems destined to share their life cycle.

Its doings will be chronicled in the future, of course. Years from now, the history of the US in the 20th and 21st centuries will largely be written by whoever wins the contest of ideologies now raging in DC. But centuries from now, historians will find the work by analysts such as those featured below to be of most use—analysts who favor cause and effect, principle, law, and reality over power, control, propaganda, emotion, and fantasy. The latter favor fairy tales, the former, facts. The latter undergird totalitarian regimes, the former, free ones.

The communications below are published with some small hope, or at least cognizance, that they might influence high-level decision makers. More importantly, they are written to help inform the decisions of individuals. In every collapse of empire, there are some citizens who are wiped out and some who survive. There are also some who do well and are able to start again—perhaps elsewhere, perhaps in their homes.

Our hope at MFG is that you will not only survive any difficulties that may lie ahead of us, but that you will do well and establish a long-term legacy for your familial and ideological heirs. Toward that end, we offer our services. Some of those services involve exchanges of value. Those summarized below are free content—researched and produced at significant cost in time, money, and effort, but with conviction that the work is important and the beneficiaries even more so. We hope you benefit greatly from them.

Key Takeaways:

  • The power grab devolves—for now
  • Fed points the finger; doesn’t look in the mirror
  • Crisis has a long on-ramp
  • Gold is in its element…

The McAlvany Weekly Commentary: David and Kevin continue to discuss the worldwide trend away from unipolarity toward multipolarity in world trade, economics, and cooperation. The catalyst for this change is the weakening of globalism’s currency—the dollar. The petrodollar has, true to its name, been the fuel for the world’s largely unified trade system. And though new trade blocs are emerging, the decline of the dollar is also prompting something of an “every nation for itself” mentality, particularly among central banks. They are exchanging their old reserve currency for new—dollars for gold (which is actually new currency for old—but that’s a story for another time). This trend toward global decentralization and national centralization is characterized not only by central banks vacuuming up all the real money, but by growing power politics. In Chile, this has been demonstrated by the nationalization of its immense lithium mining industry in order to funnel battery production funds into state coffers. In China, among many other things, it is most recently demonstrated in the bolstering of its railroad network. These trends portend many more macro changes in the future, many of which are discussed in the Commentary this week and every week.

Credit Bubble Bulletin: This week Doug focuses on the misdirected blame game being played by the Fed in regard to recent bank failures. According to the Fed’s review of its supervision of Silicon Valley Bank, the cause of the failure was that, “[SVB’s] senior leadership failed to manage basic interest rate and liquidity risk.” Taking the most powerful bank on the planet to task for its bad aim, Doug points out the obvious disconnect, “Let’s be clear: SVB had its share of idiosyncratic risk. But this is a systemic issue. Three major bank failures in seven weeks would speak for itself.” That used to be called a blinding flash of the obvious, but it seems that nothing appears obvious to high officials at the Fed or government these days. That’s why we need the Credit Bubble Bulletin.

Hard Asset Insights: In this day of instant gratification, when we can accomplish mountains of work instantly on a cell phone in our hands, telling people that some things take time is not always a popular or even comprehensible message. The McAlvany Weekly Commentary has been discussing the long process of losing reserve currency status for the dollar. Similarly, Morgan this week discusses the long process of economic crisis in the US’s massive economy. It’s not so much that catastrophic events can’t happen quickly, it’s that the lead-up to those events can take a surprisingly long time. And lead-up incidents can be serious in their own right, as recent bank failures and consumer price inflation demonstrate. Reports from the banking sector continue to be worrisome, and historical precedents bode ill for our immediate economic future. The details are many, telling, and dire. There is certainly hope, and Morgan tells exactly where to find it.

Golden Rule Radio: Rob again joins Miles in the studio, where they acknowledge the immense tension they experience in client calls and from general observation. The constant drumbeat of bad news in so many spheres of activity is resulting in “raw nerves,” in Miles’ words. The hosts look at gold and silver, both of which seem to have been moving sideways for the past several weeks. And while the hosts recognize the possibility of some near-term downside in gold, they regard it as minimal compared with the upside. Rob mentions the possibility of significantly higher gold by the end of May given weakness in the dollar, geopolitical tensions, and central bank gold buying. And Miles puts gold’s potential in perspective, comparing it with both historical bull markets and other tangible goods that have appreciated greatly in price over the past 16 months. He also mentions a price possibility floated by Jim Rickards that will surprise many listeners.

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