If you follow business headlines you know gold broke its all-time price record early Monday when it pushed above $1,920 an ounce. So, what is this telling us?
It’s easier to understand gold’s record-breaking move up if you look at it from the other side. The dollar is now at its all-time low compared to gold.
In other words, the dollar is losing value.
This is a direct result of U.S. government borrowing and spending backed by Federal Reserve money printing.
Since the economy crashed thanks to the governments’ shutdowns in response to the coronavirus, the federal government has borrowed trillions of dollars for its stimulus program. The June budget deficit was bigger than all but five of the yearly deficits in history. Meanwhile, the Fed is monetizing a big chunk of that debt through its government bond purchase program. In effect, it is buying up U.S. debt and paying for it with money printed out of thin air.
As more dollars go into circulation, each individual dollar is worth less, all other things equal. That’s why the price of gold is going up in dollar terms. We have more dollars chasing roughly the same amount of gold. That means it takes more dollars to buy an ounce.
In simple terms, the rising price of gold reveals the devaluation of the dollar.
It’s easy to blame this on all of this on the government response to the coronavirus, but the truth is this dynamic was in play long before COVID-19 reared its ugly head. The Fed launched quantitative easing (a fancy term for money printing) last year as tremors started to run through the bubble economy. In fact, it was the central bank that set this all up with its money-printing response to the 2008 financial crisis. If you look back through time, you can clearly see how the Fed wrecks the economy over and over again.
This is why it’s imperative to end the Fed. It is the engine that drives the most powerful government in history.
The Fed wields enormous power through its ability to maintain a monopoly on money. It also creates a weakness because there are steps we can take to undermine and break down that monopoly power.
By passing laws that encourage and incentivize the use of gold, silver and cryptocurrency in daily transactions by the general public, state action has the potential to create a wide-reaching impact and set the foundation to nullify the Fed’s monopoly power over the monetary system.
There are a number of concrete steps states can take to expand the market for gold, silver and crypto as money.
- Recognize Gold and Silver as Legal Tender
- Eliminate Sales Taxes and Capital Gains Taxes on the Exchange of Money (Gold, Silver, Platinum)
- Establish State Gold Depositories
- Incentivize the use of cryptocurrency and eliminate all state taxes
