Yellen at Helm of Fed Is Thumbs-Up for Hard Assets

By Lee Bellinger / December 27, 2013
  • Opting out of politically controlled money is the much-ridiculed “ultimate protest” that all big spenders truly fear.
  • Yes, you can save your retirement plans and help America all at the same time.

President Obama’s appointment of Janet Yellen as Chairwoman of the Federal Reserve Board has sucked up a lot of investors’ attention. Our key takeaway is that Ms. Yellen’s appointment is total confirmation of what Independent Living has been telling you for some time: That despite the media’s self-blinding hype over “tapering,” “reining in” or “unwinding” of Federal Reserve money creation operations (QE3), this just can’t and won’t happen.

Not like we were geniuses for predicting what should be obvious. Short of an existential crisis, public spending will continue unabated. And Uncle Sam will never find anyone with deep enough pockets and be stupid enough to step in and replace the Federal Reserve Board’s debt buying operations which keep the government’s doors open.

Which is what Fed tapering or “unwinding” its money creation activities would actually require.

Wall Street traders talk on CNBC as though U.S. bond “markets” that fund government operations are real. When in fact the Fed’s debt buying sprees have nationalized debt finance markets. The real story is that for the first time in U.S. history, bond markets no longer serve their historic role as a check against or early warning system of national insolvency.

Haven’t you noticed that analysts who stress that the bond markets have not “confirmed” gold’s gains over the past decade never admit that the bond markets themselves are under government control? No wonder markets are confused! Traditionally, high gold prices and a bond market crisis would signal that government growth is unsustainable. In turn putting a brake on spending.

Bond Market Fire Alarms Disabled

So U.S. bond markets falling under the direct control of political flunkies remains the most significant unreported and least understood financial story of our time. As well as the greatest guarantor of hard asset values going forward.

Yet most eyes are focused on the nationalization of private insurance through Obamacare.

Assuming you agree with my conclusions, now is an important moment to keep your focus on the ball. Don’t let short-term gyrations that regulators spawn in hard asset markets fool you as they have so many. As incoming Chairman Yellen, a graduate of the hard-left Berkley political culture, told an AFL-CIO gathering on February 11, the Fed attaining “maximum employment” must come to take “center stage” for the foreseeable future.

Translation is that Ms. Yellen’s hard-core commitment to ginning up cash to fund big government operations despite the growing risk of systemic crisis is for real.That’s all you need to know for your inflation expectations.

Because while this form of “certainty” is bad news for the country, it is truly awesome on a personal level for smart investors. So long as you plan for the dangerous side effects (especially social and financial and personal security).

Because for at least another three years America will continue to be besieged by mounting dysfunction and the specter of collapse…aggravated by mounting debt, political manipulation of markets, and marauding government with a seemingly unlimited credit card.

The last fig-leaf central planners hold before “markets” is the widespread irrational faith that our political system will eventually do the “right thing” to avert monetary collapse of federal operations. Too many people still have scales on their eyes in order for hard asset contrarians to be rewarded for their foresight quite yet.

Sooner or later it will sink in with GOP voters and their libertarian cousins that frontal political assaults against entrenched federal special interest groups are mostly for show and unlikely to be successful. As more and more people catch on that meaningful public spending controls are a dead letter no matter which major party is running the show, they will increasingly vote with their dollars to opt for more stable long-term retirement investments.

The virtue of reliable money in a sea of paper debt is an idea whose time has not yet come to the masses, let alone the Republican party.

Eventually, true political reformers and limited government advocates will get behind the idea that the smartest path forward is to call for the return to honest U.S. money. Championing a strong dollar tied to something other than political shenanigans in Washington is by far the best way to cut runaway government’s credit card in half without getting sucked into unwinnable spending battles.

New Hope Looms: All Frontal Attempts to Cut Government Have Failed

Even during the Reagan era, entrenched federal interests frustrated all but the most cosmetic of trims in government operations.

For now, there is simply no way to politically arrest the ever expanding government bubble — fuelled by money creation tactics such as below market interest rates, massive debt purchases and other methods of creating trillions of currency units to sustain government’s growing addiction to politically manufactured cash.

Yet government growth extremism in the pursuit of unsustainability has its hidden silver lining. Especially when it comes to retirement planners rediscovering classic solutions that have been long forgotten or misplaced. The Yellen appointment means that failed economic policies will be followed through to their logical extension — the collapse of the dollar as we know it. Detroit on a national level.

And with it the collapse of faith in central bankers and the inevitable rise of hard assets as money.

Benjamin Franklin once said, “facts are stubborn things.” Which is why now that the extremists have all the levers of central banking power, that dawning will come sooner rather than later. A crisis is inevitable at some point.

Fortunately, Americans who believe in limited government do have a choice that transcends politics or an “end-of-the-world” financial meltdown in Washington. And that answer lies in our past. Forgotten warnings from our founding fathers about the evils of allowing political people to control how much money is printed for their own nefarious ends.

Forgotten Warnings from Our Founding Fathers Offer New Hope

Lessons the founders took from the Roman Empire itself, which engaged in currency manipulation to sustain its proxy wars, its intrigues, its massive public spending.

The quiet rise of gold as a competing currency to the besieged dollar is already a global movement. The U.S. financial media are conspicuously silent on this trend, but it is a fact nonetheless and a source of hope. Quite literally the rise of classic money that cannot be printed, altered, or manipulated over the long haul.

If enough people “vote” by opting out of paper money this way, even in small increments, a truly honest dollar in America has the potential to restrict government’s financial spending pyramid schemes just like a credit card limit. No magic solutions, just steady pressure for real reform as governments the world over continue to run out of resources for their ever expanding programs of dependence.

That is what competition does, even when it is so fiercely resisted by powerful entities such as the U.S. government, central banks, and Wall Street inflation junkies. Especially as Americans in larger and larger numbers are opting just a little bit out of the dollar. Some state legislatures have dusted off the founding papers of this country and enacted the acceptance of gold as money, as are many lenders.

The trend is in place, and it will continue to get stronger as central bankers lose more and more credibility in the eyes of enough people.

Hard Asset Ownership Rises as Central Banks Steadily Lose Credibility

Truth is, until recently people who invested in precious metals have long been easily dismissed as gold bugs, or anti-dollar, or worse, crazy or anti-Americans. Personally I used to roll my eyes whenever someone mentioned gold or the Federal Reserve.

More and more people like me are looking anew at the forgotten teachings of our founding fathers on this very subject. And boy were they way ahead of the curve on the importance of honest, sound money to a free society and a government that lives within its means.

A few years back, I co-founded a hugely successful company known as Independent Living Bullion. I did so mostly as a service to my readers, selling them precious metals for a small fraction above melt value, instead of the 30-50% markups that “rare coin” con artists were heaping on them.

Sales in year one were significantly larger than we anticipated. It was quite impressive to watch so many Americans choose to “opt out” of what they saw as a politically corrupt, manipulated dollar.

Demand for Physical Precious Metals Among My Readers Surprised Even Me

It made a real impression. It gave me hope that in a world awash in paper debt, if enough people opt out of the dollar in this manner, the pressure for reform can grow. Contrary to what the Wall Street media say, this trend is already underway despite total denial on the part of the political class. They want people to pay attention to things other than the declining purchasing integrity of their own money.

Opting out of politically controlled money is a powerful and profound protest tool if it happens slowly and on a wide enough scale over time. For example, many education reform experts acknowledge that the creation of so-called “Charter Schools” came about as a result of the home school movement. Once upon a time a tiny handful of children were educated at home and this had little or no effect on the public education system.

But over time, the home school movement has grown in numbers and credibility. Because desperation is the mother of invention and ultimately real reform. Almost 4 million kids are being opted out of the failed public system. Nowhere near enough reform yet, but the rise of Charter Schools is definitely a start, and it would never have happened if more and more parents weren’t finding alternatives to the public school mess.

Some Emerging Signs of Hope

When it comes to public dissatisfaction with the management of the dollar by politicians, some limited gains have been made. The last Republican Party Platform touched on the desirability of establishing some form of metallic standard to stabilize the dollar and thus set limits on how many new dollars can be printed by political interests in Washington. A small step yes, but a start.

Our own founding fathers knew that politically controlled money is ultimately dishonest money. They knew, as America’s true spending reformers are rediscovering the hard way today, that when our political overlords gain the ability to manipulate the value of the dollar, government gains an unlimited funding source that far out strips our tax base.

The Fed’s growing extremism and the deepening consequences its spawns will increasingly undermine the central bank’s credibility. That will create the potential for an investment-led political reform movement behind restoring the U.S. dollar to its deserved spot as the greatest, most stable currency in the world.

The Real Money Movement

Honest, non-politicized money that we can once again count on. It is a powerful idea whose time is coming as world governments sink deeper and deeper into a bottomless pit of debt driven spending.

Sooner or later the nation will have no choice but to look at anchoring the dollar to something real. Putting a monetary extremist in charge of the Federal Reserve will hasten the consequences of politically controlled money that is tethered to nothing more than wild spending schemes.

Restoring sound money can be a powerful battle cry, especially as the damaging side effects of creating money to fund bloated government become so great that even CNBC notices. It is just a matter of time, because the global trend toward broader ownership of reliable hard assets is irreversible.