Russian Roulette – The Currency Version

Miles Franklin sponsored this article by Gary Christenson. The opinions are his and are not investment advice.

Breaking News:

• Gold closed on July 17 at $1,810.
• Silver closed at $19.76
• Tesla stock spiked to $1,795 and closed at $1,501.
• The S&P 500 Index peaked at 3,393 on Feb. 19, crashed, and hit a second peak at 3,233 on June 8. It closed on July 17 at 3,225.

Russian Roulette is a “game.” Insert one .44 magnum cartridge into your six-shot revolver, spin chamber, and point at your head. Your temple, forehead, eye socket or under your chin will work. Pull trigger. Probability of survival after one trigger pull is 83%.

Spin the chamber after each trigger pull and pull trigger five more times. Probability of survival after six independent trigger pulls is 33%.

Why would anyone play this game? The result, after enough attempts, is clear—death.

Another example: Every unbacked currency in history has failed, inflated into worthlessness—eventually. Stretching the analogy, one might say that after enough monetary trigger pulls, every currency dies unless it is real money—gold—or backed by gold. Unfortunately, the U.S. severed the last gold connection to the dollar in 1971. President Nixon “pulled the trigger.”

Why would any country play this game? Guaranteed destruction of the currency is an ugly consequence of fiscal and monetary irresponsibility. Yet central banks and governments “pull the trigger” many times.

The result is devaluation of the currency. Price of gold in dollars in 1971 was $41. Price of gold in mini dollars in 2020 is $1,810. Price of gold in 2030 in micro-dollars could be $5,000 or $25,000 or $50,000. That price depends upon how many times the Fed “pulls the trigger” in their devaluations.

Possible reasons why the U.S. plays “Russian Roulette” with its dollar: It can’t happen here. We are special. It extracts wealth from the many and transfers it to the few. No knowledge of history. This time will be different.

Russian Roulette—the expanded game:

Phase Two: Place two .44 magnum cartridges in your handgun, spin the cylinder each time, and pull the trigger six times. Probability of survival is 8.8%.

Analogy: Severing the last connection between gold and the dollar was the first bullet. Allowing deficit spending, fractional reserve banking, debt, warfare, and welfare to expand “out of control” was the second bullet.

Phase Three: Place three .44 magnum cartridges in your handgun, spin cylinder each time, and pull trigger six times. Probability of survival is 1.6%.

Analogy: Add the “third bullet” to the destructive arsenal. Lower interest rates to stimulate growth of debt and encourage a bubble in Internet stocks during 1996 – 2000. This resulted in a nasty crash that hurt many people in the bottom 90%.

Phase Four: Place four .44 magnum cartridges in your handgun, spin cylinder each time, and pull trigger six times. Probability of survival is 0.14%.

Analogy: Add the “fourth bullet” to the Federal Reserve policies, inflate a real estate bubble and smaller stock market bubble. This resulted in a nasty crash that created millions of foreclosures and untold misery.

Governments and central banks didn’t learn from the experience or ignored the lessons and inflated more bubbles.

Phase Five: Place five .44 magnum cartridges in your handgun. Spin cylinder each time and pull trigger six times, if necessary. Probability of survival is 0.002%.

Analogy: Add the “fifth bullet” to the Federal Reserve policies, instigate QE4ever in various forms, inflate the “everything bubble” and watch as the stock markets bubble higher and dollars devalue.

Results of the “fifth bullet” choices are;

• Tesla stock sold for $351 in March of this year and hit $1,795 this week. It could go higher if the Fed pumps more “air” into the bubble.

• Apple stock sold for $10 in 2009, closed at $385 on July 17. Central banks create their currencies from “thin air,” convert into dollars, and buy Apple stock. Impressive results.

• Amazon stock sold for $35 in 2008, closed at $2,961 on July 17. Hmmmm.

Russian Roulette—the expanded game:

Phase Two: Place two .44 magnum cartridges in your handgun, spin the cylinder each time, and pull the trigger six times. Probability of survival is 8.8%.

Analogy: Severing the last connection between gold and the dollar was the first bullet. Allowing deficit spending, fractional reserve banking, debt, warfare, and welfare to expand “out of control” was the second bullet.

Phase Three: Place three .44 magnum cartridges in your handgun, spin cylinder each time, and pull trigger six times. Probability of survival is 1.6%.

Analogy: Add the “third bullet” to the destructive arsenal. Lower interest rates to stimulate growth of debt and encourage a bubble in Internet stocks during 1996 – 2000. This resulted in a nasty crash that hurt many people in the bottom 90%.

Phase Four: Place four .44 magnum cartridges in your handgun, spin cylinder each time, and pull trigger six times. Probability of survival is 0.14%.

Analogy: Add the “fourth bullet” to the Federal Reserve policies, inflate a real estate bubble and smaller stock market bubble. This resulted in a nasty crash that created millions of foreclosures and untold misery.

Governments and central banks didn’t learn from the experience or ignored the lessons and inflated more bubbles.

Phase Five: Place five .44 magnum cartridges in your handgun. Spin cylinder each time and pull trigger six times, if necessary. Probability of survival is 0.002%.

Analogy: Add the “fifth bullet” to the Federal Reserve policies, instigate QE4ever in various forms, inflate the “everything bubble” and watch as the stock markets bubble higher and dollars devalue.

Results of the “fifth bullet” choices are;

• Tesla stock sold for $351 in March of this year and hit $1,795 this week. It could go higher if the Fed pumps more “air” into the bubble.

• Apple stock sold for $10 in 2009, closed at $385 on July 17. Central banks create their currencies from “thin air,” convert into dollars, and buy Apple stock. Impressive results.

• Amazon stock sold for $35 in 2008, closed at $2,961 on July 17. Hmmmm.

• The NASDAQ 100 index measured less than 1,050 in 2008, and closed at 10,645 on July 17, down slightly from July 10. Bubble!

• The NASDAQ 100 index measured less than 1,050 in 2008, and closed at 10,645 on July 17, down slightly from July 10. Bubble!

• But the DOW, S&P 500, FTSE, DAX, NYSE, Nikkei, and most other indexes remain below their February (pre-lockdown) highs.

Phase Six: Place six .44 magnum cartridges in your handgun. Spin cylinder and pull trigger. Probability of survival is zero. A second spin is unnecessary.

Analogy: Initiate Project Pandemic and Operation Lockdown. Expand national debt by trillions of dollars in a few months, unemployment claims skyrocket to unbelievable numbers, large and small businesses fail, and bankruptcy courts are overwhelmed. Graft and corruption catch a bid, political maneuvering rules, and… what a shock… it happens in an election year.

Phase Six will have dire economic consequences for many years, most of which have not yet materialized. Watch and wait for an update.

REPEAT QUESTION: Why would any country pass laws that encourage the destruction of the currency via continual devaluation? Were “payoffs” involved? These policies transferred wealth from the many to the few. The transfer accelerated post-1971.

Consider the wealth effect as showed by the following graph. The economic version of Russian Roulette created this wealth and income imbalance.

WHAT IF WE DON’T HAVE SENATORS AND CENTRAL BANKERS ON SPEED-DIAL?

• Recognize the game is fixed. “They” have created excessive debt and devalued the currency. Stocks, real estate, silver, and gold prices rose as dollars bought less.

• Protect savings and retirements with silver, gold, and hard assets.

• Speculate on mining stocks with risk money.

• Be careful with tech stocks after an eleven-year blow-off bubble in prices. A transition from digital stocks to real money—gold and silver bullion—makes sense when gold and silver are inexpensive relative to stocks, M2, national debt, and total debt. Read: A Long and Perilous Journey.

Listen to: Andy Schectman – COMEX Silver Deliveries

CONCLUSIONS:

• Plan for the worst—think many Russian Roulette spins with three .44 magnum rounds in the chamber. Hope for the best but hedge your hopes with physical silver and gold bullion in safe, non-bank, storage.

• It is an election year. The political war and geopolitical maneuvering are intensifying. Expect more debt, bankruptcies, unemployment, and violence.

• Protect your assets with real money that can’t be “printed” by corrupt central banks and insolvent governments.

Call Miles Franklin at 1-800-822-8080. They source silver and gold bullion to “insure” your assets. Like toilet paper, coins, hand sanitizer, aluminum cans, and meat, gold and silver may become difficult to find in the coming years.

Gary Christenson