BALTIMORE – You had to admit. Muhammad Ali could take a punch.
Unlike Donald Trump, Dick Cheney, George W. Bush, and Bill Clinton, he was a real war hero. He stood up and faced his enemies on the draft board, rather than dodging them.
And when the feds walloped him as a criminal draft resister, Ali didn’t throw in the towel in a whimpering surrender to superior force.
Instead, he used his famous “rope-a-dope” technique. He let the feds wear themselves out punching him until he was ready to fight again.
Ali could have joined the army. He would have been a celebrity in uniform, like Elvis, doing PR work for the Pentagon.
Far from the hot sweats of Da Nang and the Mekong Delta, he would have been a cool spokesman and ambassador for the emerging empire… helping the U.S. military gin up support for its dead-head war in Southeast Asia.
By refusing to go along, Ali, the world boxing champ, had everything to lose and nothing to gain. It was just a matter of principle.
“I ain’t got no quarrel with the Viet Cong,” he said.
The blabbagentsia back home accused him of being unpatriotic.
The feds said he was a lawbreaker. But coming into focus is a different picture of what heroism is all about.
And it calls into question whether patriotism and do-goodism are just forms of cowardice… and whether Bernie Sanders is a sanctimonious grump.
But this is a deeper subject than we manage today. Besides, we won’t have time to read all the howls of protest from readers.
Instead, we jump for solid ground…
As you recall, dear reader, we believe the Fed will never “normalize” interest rates.
We got a quarter-point bump in December. Then nothing.
Fed chair Janet Yellen had let it be known that another rate hike might be coming this month.
But then, on Friday, the big U.S. jobs report came out. Reported the Financial Times: “Weak jobs growth is ‘smack in the face’ for U.S. economy and Fed rate increase.”
Instead of the 160,000 new jobs that were widely expected in May, nonfarm payrolls rose by a seasonally adjusted 38,000.
Plus, the Bureau of Labor Statistics revised the figures down for March and April, too, dealing another blow to the optimists at the Fed.
When you don’t want to do something, you find plenty of reasons not to do it. In the present case, the Fed doesn’t want to normalize interest rates.
Under a classic gold standard, interest rates go up and down depending on supply and demand.
When the supply of savings goes up, and other things remain as they were, interest rates should go down.
Then when the lower interest rates do their work… and economy heats up… the demand for credit increases, too. Again, assuming other things remain as they were, the price of credit – interest rates – should go up along with it.
Supply and demand move in cycles. High interest rates encourage savings… which add to the amount of available credit… which depresses interest rates.
Then the lower interest rates discourage saving… until the price of credit goes back up. Up, down, constantly correcting on both sides. That’s the way it’s supposed to work.
No need to remind us that it hasn’t worked that way for a long time.
The Fed and its banking system now create credit (money) out of thin air; savings have nothing to do with it.
The corrective feedback loop we have just described no longer works. Not only can the feds manipulate the price of credit… but also they can do it for a long time, severely distorting the whole system.
Then, blind and crippled, the economy barely limps along… always in danger of tripping and falling.
No way is Ms. Yellen going to stick out her foot.
Here’s the Fed chief, speaking yesterday, as reported by Bloomberg:
“I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run,” Yellen said Monday during a speech in Philadelphia.
Her comments were less specific than in her previous remarks in describing when she thought the Fed should raise rates again. On May 27 at Harvard University, she said an increase would likely be appropriate in “coming months,” a phrase she didn’t repeat on Monday.
Ms. Yellen and her predecessors have conducted the largest experiment ever in monetary central planning.
Since 1998, central banks have increased their balance sheets (which serve as the world’s monetary footings) by 1,600%. And last week, the total amount of debt trading at negative yields went over $10 trillion.
We sit on the edge of our seats and wonder what will happen next.
Janet Yellen, Ben Bernanke, Alan Greenspan – they have been called the “heroes” of the world monetary system.
Are they really? Did they face up to the debt problem? Or dodge it? More to come…
Further Reading: The so-called “heroes” of the world monetary system are actually more like the villains in this tragically comical story. They are the true architects of the next big financial collapse – one that will be even bigger than 2008, 2000, 1987… even 1929.
And what makes it so frightening is that this time around, it will not only hit stocks, but also your credit cards… bank account… and even the cash in your wallet. The first step in protecting yourself is to understand what’s really going on. Find full details here.
By Jim Rickards, Editor, Currency Wars Alert
You see, most folks seem to think the coming collapse of the global monetary system will throw the world back into the Stone Age. They think people will go into caves and start eating canned goods.
But here’s why they’re shamefully wrong…
Based on the monetary history of the past century, a monetary collapse meant that the major financial and trading powers of the time sat down around a table and simply rewrote the “rules of the game.” Think about it…
Fact is, these “rule changes” happen every 30 years or so. And the ramifications are far from commonplace. For you and me, this can have DEVESTATING effects.
You see, when the elite sit around the table and rewrite the rules, the changes are ALWAYS in their favor. But they may NOT be in ours.
In other words… when the monetary collapse comes, zombies aren’t coming for your family, they’re coming for your wealth. But, here’s why this is so urgent…
Based on the history of the past century, we’re likely at the end of the useful life of the current international monetary system. The “inflation age” is about to come to a grinding, drastic halt. I’m sure you know what I’m talking about. This should be a big red warning, flashing on your screen.
It’s also the same reason that gold is starting to move higher.
The way I see it, the “new rules” of the game will likely include gold. (That’s because gold has ALWAYS been in the mix.)
That’s why I recently changed my thesis on gold. And I’m issuing a brand-new urgent warning.
Editor’s Note: To explain his new thesis on gold, Jim recorded a special presentation. In it, he reveals where prices are headed… and what you can do about it. Click here to watch before it’s too late.
Global Monetary Collapse Might Be a Profit Opportunity
Shares of the world’s largest banks have collapsed. One investing expert believes it signals a coming money crisis. He also says there’s a way to profit from the disaster on the horizon.
This 87-Year-Old Market Indicator Is Bullish… for Now
One of the oldest Dow Jones’ stock market averages – the Dow Jones Utility Average – just hit a new all-time high. And it tends to lead the broader market higher.
How Come Japan’s Debt Burden Is Falling?
Japan is one of the most indebted societies in the world. But new reports say its debt burden is falling. That’s because the country’s central bank has been scooping up bonds and taking them out of private hands.
Lots of great feedback today on yesterday’s Diary issue about the real reason we have a welfare state.
Love Bill’s writing on the welfare state. Makes me think of that great Dire Straits song – money for nothing and the chicks for free!— Ken M.
Could it be that our representatives really don’t know what we think?
I’ve tried and tried and tried to send thoughts and ideas to various representatives who chair this or that congressional committee and find that you can’t contact them unless you’re in their voting district.
Try expressing a point of view to Paul Ryan, for example, and see how far you get. On top of that, 60 Minutes reports that the Republican national committee requires elected members to spend at least 30 hours a week calling donors.
Good luck with those representatives accomplishing anything.— Michael M.
Bill, do you consider Social Security free money since we put money into it to pay for part of our retirement? If we had put that money into a private investment or insurance plan and received payments back after retiring, would that be free money?
I don’t think either are.— Joe M.
Have mercy, Bill! The Social Security Act setup by FDR in the early 1930s was for old, retired peeps. Just look at the “dippers” now involved.
‘Taint fair! I wish you would be a little kinder to us ol’ folks.— Price M.
Leave the real trees and genuine snakes alone. Stick to removing the camouflage put in place by government bureaucrats, high and low.— Jim R.
Our self-induced welfare fiasco will continue until all goes to hell!
But it may take a while longer as expected. For the last 25 years, young American citizens seem to be ignorant to any facts. But the reality is somebody has to pay for us.
It’s the same scenario plaguing the entire Western hemisphere. Political elitists control every walk of life today. This will not change, unless a revolution takes hold of the bunch and eliminates them all.
And I am not convinced the next bunch will be any better!— Karl K.