The Economy is in Trouble

When the economy is in trouble, the Federal Reserve prints money.

That’s its entire purpose.  That’s what it does.  Oh sure, it clears checks between banks, but a private clearing house could do that, and maybe do it better at less cost.  But the Fed prints money when the economy is in trouble.

Well folks, the economy is in trouble so I guess you can see where we’re headed!

The affordability crisis hasn’t gone away.  It has gotten worse.  And the people know it!  Let’s turn to a brand-new report from the Gallup polling organization, Affordability Still Dominates Americans’ Financial Worries:

WASHINGTON, D.C. — The high cost of living continues to top Americans’ list of the most important financial problems facing their families. The 31% citing it in an open-ended question is below the 41% peak in 2024 but similar to a year ago and among the highest in Gallup’s more than 20-year trend.

Energy costs, which have risen notably this year, are mentioned by 13% of Americans, up 10 percentage points from last year and the highest since 2008 — tying housing costs as the second-biggest concern. Healthcare ranks fourth at 8%, consistent with readings since 2020.

Gallup says this is the fifth consecutive year that affordability issues have topped the survey by a wide margin.

You ain’t seen nothing yet!

Consumer prices that are slamming the people so hard have not even begun to get where they are going.  David Stockman, Reagan’s former budget director, draws our attention to one illuminating fact.  The energy price hikes driven by the Iran war are coming home to roost “On an annualized basis, the diesel fuel bill for the US truck fleet went from $155 billion per year to $250 billion per year at current oil prices.” That is but one rising price indicator out of many.  And what about the farmers and their heavy equipment that runs on diesel?  

You get the idea.  The affordability crisis is about to dramatically worsen.  Stockman says, “The Persian Gulf supply shock is about to monkey-hammer the US economy good and hard. And then the AI bubble in the stock market will bust.”

Accordingly, we suggest that there is great danger in the stock market bubble for most investors and recommend a move to the maximum safety zone of precious metals.  Any pause in the bull market or price pullback in gold and silver must be viewed as an opportunity for accumulation.