Exported U.S. Inflation Set to Return Home


Prior to 1971, it was France’s President, Charles de Gaulle that called the U.S. on its con game, alleging they were printing more dollars than they held gold in the vaults.  This caused countries around the world led by France to send back USDs in return for real money: gold.  It was that return of previously exported inflation in the form of USDs that was a major catalyst that sparked American inflation to sore past 13% in the 70s.

The first question that may come to mind is how a country can export inflation in the first place?  Well, the way that is done is by printing USDs and rather than keeping them within the country where they will chase up local prices, they are exported to other countries in the form of government debt in return for tangible goods.  That way, the U.S. receives goods, but their local prices in USDs remain low.  This, of course, is only beneficial to the West as long as the world continues to accept worthless pieces of paper for their tangible goods and services.  Alternatively, this is only beneficial to the rest of the world as long as those pieces of paper hold its promised value.  The problem, that is quickly becoming the opposite of what is happening as the USD continues to inflate due to reckless monetary policy at home and abroad.  Yes, the Federal Reserve has been incredibly hawkish lately continuing to “let their balance sheet mature” by allowing current U.S. bond holdings to expire and then not replacing them with more in the hopes of taming inflation.  However, the opposite is being achieved, and that is because the Federal Reserve balance sheet was ballooned far bigger than it had EVER been in the past and in an incredibly quick time frame.  It is hard for people to comprehend just how much money printing took place in response to the 2019 pandemic, but when you look at the current Federal Reserve balance sheet, it puts it more into perspective…

The response to the 2008 Great Financial Crisis looks like a little blip in comparison to now.  You can see the enormous spike that took place in 2020, and since starting “monetary tightening” the Federal Reserve has BARELY dented their balance sheet and already world markets are seizing up in response to heightened interest rates.  This is causing the implosion of other currencies around the world, all the while, the USD continues to inflate itself meaning that countries holding majority of the United States debt are getting hit with a double whammy.  Not only is their national currency rapidly losing value, but also their foreign reserves, which are mainly made up of USDs, are rapidly losing value too.  The only form of money that has continued to GAIN value in countries that are seeing their currency destroyed is gold and silver.

So when will we see a substantial rise in gold and silver prices out West?  Looking around at the latest developments in the world economy, the answer could even be before the conclusion of 2022.  The reasons being are relatively straightforward.  First off, when considering what was laid out above, those countries holding a large amount of U.S. government debt in the form of U.S. bonds/treasuries, have the greatest potential to send inflation within the West skyward if they choose to margin call the U.S. government by selling bonds and buying up their own local currency instead.  This would become even more likely if there was a plan in place to back local currencies with gold prior to the selling of U.S. debt like there is within BRICS nations.  Below you can see the current holdings of U.S. government debt, what should be noted is who the top three countries are, and what position do they currently find themselves in financially?

Japan, China, and the United Kingdom.  Each of these countries is in a major financial quagmire and one of their main asset holdings is U.S. government debt.  There is nothing stopping them from dumping the dollar to protect their local currencies, especially if this plan coincides with an increase in gold holdings to protect their local currency after purchase.  The UK is on their 3rd Prime Minister in as many months large in part due to the financial failures of the past two that caused the Bank of England to launch a massive printing spree to try to protect the falling pound.  Japan just last week stealthily intervened in the Japanese Yen, buying up over $35B worth of Yen to help strengthen their local currency.  Then, to top it all off, China has recently announced that a coordinated dumping of the dollar within its state banks would be the best option to strengthen the local Yuan.  In other words, these three major holders of U.S. government debt are now looking to dump dollars and increase the local currency reserves to help combat skyrocketing inflation.

This must have come to no surprise to the Federal Reserve as just this past Monday; the Federal Reserve announced that they were looking for public opinion on potential reform to the process of bailing out large banks if they fail.  Why now?  The Dodd-Frank Act that was put into place after the 2008 Great Financial Crisis has barely been in the news for nearly 13 years, now all of a sudden it is taking centre stage.  Many have theorized they are getting out ahead as any public comment needs to be submitted by Dec 23rd, 2022 – then decisions will be made on how the next bailout would work.

The fact remains, if the Fed decides to reverse course and pivot on rate hikes at any point before years end – silver and gold will race to account for all dollars in circulation, just as it is doing in other currencies losing value quicker than the USD.

It also holds true that those who wait for certain confirmation of a Federal Reserve pivot will be largely too late, as once announced, the run on physical gold and silver to preserve wealth will be matched only by the Diwali rush that took place last week and even then, it may dwarf that rush too as this crisis will cross all cultural lines.  If you wish to get out ahead of the chaos, there are multiple ways to do so within precious metals.  Below you will find a fractional silver option, an exclusive 10 oz Den of Thieves silver bar, along with our 1oz Gold RCM Bar that comes with some of our lowest premiums for 1 oz gold products – helping you to preserve more of your wealth.

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