U.S Treasury Bonds maturing in 3 months have a yield of .01%, effectively 0% interest. The U.S. Government needs to raise trillions of dollars but the cost of borrowing is nearly zero… for now. The Bond Market is being duped. The market perceives the environment to be deflationary and that perception will cost them much wealth in the near term. The monetary system is creating trillions of new money which is true inflation. There is always a lag of inflationary prices after the monetary system is stimulated so you should expect hyper-inflationary prices to arrive soon.
How can I come to that conclusion with commodity prices is such decline? There has been a 25 year cycle of leveraging that is in full reversal. This reversal is on display in the COMEX (Commodity Exchange) market. At the beginning of this year there were 593,953 gold contracts outstanding. A gold contract represents 100 troy ounces of gold, currently worth about $80,000. As of the end of the current reporting period, there are 289,700 contracts outstanding. This is a classic case of de-leveraging out of an investment. Speculators have closed out their short positions in gold with gold up $145 since these contract levels were last seen. Gold is now poised to resume its upward momentum.
This 0% interest rate policy severely hurting the savers. Retirees are being sliced and diced with the pathetic rates being offered by the banks. Each day wealth is being transferred from the savers to the black hole of the financial system. Clearly, the Federal Reserve is not the friend of those individuals that "did the right thing" in their lifelong financial planning. Wealth destruction is in full force now and there seems to be no end in sight.
The challenge individuals face is the protection of wealth accumulated over a lifetime. Inflation eats away at wealth. In the past, interest rates generally exceeded the true inflation rate. They were somewhat linked together and you could be assured that your wealth was protected if you placed your money in a bank and received interest. Since WWII, this assumption was valid in the U.S. Now we have a deterioration of the monetary system and the financial institutions are on life support. The local community banks are functioning fine for now. The major banks continue to reveal their poor management of assets and are placing the nation in a highly exposed position. Where can one place his assets where they are protected and retain their value?
Mat 6:19-20 "Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal;
"but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal.
It appears that we are moving into perilous times. The financial assumptions we have based our everyday lives on are being dismantled before our very eyes. Very few of us have experienced this before. People from other countries have lived through major upheavals but Americans have been buffered from those financial catastrophes. The U.S. has been the beacon of hope for others around the world. GOD’S protection stood as a testimony to other countries who were envious of the American Dream. This Dream was replaced by arrogance. The humility of being under GOD’S grace has been forgotten by most.
Are you rich toward GOD or have you attempted to lay up a treasure for yourself? The following parable speaks to the problem faced by Wall Street and those who relied on Wall Street’s wisdom:
Luke 12:16-34
Then He spoke a parable to them, saying: "The ground of a certain rich man yielded plentifully.
"And he thought within himself, saying, ‘What shall I do, since I have no room to store my crops?’
"So he said, ‘I will do this: I will pull down my barns and build greater, and there I will store all my crops and my goods.
‘And I will say to my soul, "Soul, you have many goods laid up for many years; take your ease; eat, drink, and be merry."’
"But God said to him, ‘Fool! This night your soul will be required of you; then whose will those things be which you have provided?’
"So is he who lays up treasure for himself, and is not rich toward God."
Then He said to His disciples, "Therefore I say to you, do not worry about your life, what you will eat; nor about the body, what you will put on.
"Life is more than food, and the body is more than clothing.
"Consider the ravens, for they neither sow nor reap, which have neither storehouse nor barn; and God feeds them. Of how much more value are you than the birds?
"And which of you by worrying can add one cubit to his stature?
"If you then are not able to do the least, why are you anxious for the rest?
"Consider the lilies, how they grow: they neither toil nor spin; and yet I say to you, even Solomon in all his glory was not arrayed like one of these.
"If then God so clothes the grass, which today is in the field and tomorrow is thrown into the oven, how much more will He clothe you, O you of little faith?
"And do not seek what you should eat or what you should drink, nor have an anxious mind.
"For all these things the nations of the world seek after, and your Father knows that you need these things.
"But seek the kingdom of God, and all these things[fn3] shall be added to you.
"Do not fear, little flock, for it is your Father’s good pleasure to give you the kingdom.
"Sell what you have and give alms; provide yourselves money bags which do not grow old, a treasure in the heavens that does not fail, where no thief approaches nor moth destroys.
"For where your treasure is, there your heart will be also.