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Competitive Devaluation and Rising Precious Metals Prices

by Jeff Nielson, Bullion Bulls:

Words have meaning. Actions have consequences. It is very easy for people to forget these tautologies inthe Wonderland Matrix. Most of the time, the words we hear are lies. In other words, what is said is not what is actually meant (or thought). Alternately, the words we hear are vacuous euphemisms, like “the New Normal”, i.e. words without any meaning at all.

Actions have consequences. But inside the Wonderland Matrix, the mainstream media pretends there are no consequences, or (even more perversely) asserts that the “consequences” of a particular action are the precise opposite of the actual consequences. An obvious example of this perversity came when the ECB loaned much more money to Greece (a bankrupt economy), and then called that loan “a bail-out”. In the real world; you cannot “bail out” a bankrupt debtor by increasing its debts, you can only worsen the insolvency.

In the real world, actions have real consequences, hence the title to this piece. Competitive devaluation is the official economic/monetary policy of the Corrupt West. What is the consequence of competitive devaluation? To answer that question, as always, we must begin with definition of terms. What is “competitive devaluation”? This was fully explained in a recent commentary.

The plain meaning of this term could not be simpler. What is devaluation itself? It is when a nation (or economic bloc) reduces the exchange rate of its currency. What is competitive devaluation? It is when nations race to devalue their currencies, as rapidly as possible.

What happens when a nation devalues its currency/reduces its exchange rate? This is an important question, since (apparently) none of the talking heads of the mainstream media and none of the charlatan economists know the answer to it. When a nation reduces its exchange rate, the price of everythingrises.

Devaluation = reducing the exchange rate = creating (price) inflation.

These terms are precisely, mathematically synonymous. Thus competitive devaluation = competitive (price) inflation. This brings us back to the insanity of the Wonderland Matrix. Inside this asylum, the inmates are “competitively devaluing” their currencies as rapidly as possible. At the same time, we have these corrupt regimes and central banks insisting there is “no inflation” (no price inflation).

These governments are racing to create inflation, but (supposedly) failing to create any, at all. If this absurdity was actually true, it would be grounds for all of these incompetent regimes to resign in disgrace – or be impeached for failing to do so. The reality, however, is precisely opposite.

If there is one thing we know with absolute certainty about the monetary fraud-factories called “central banks”, it is that they know how to create inflation. The criminal kingpin of these fraud-factories is the Federal Reserve. In its first century of crime, the value of the U.S. dollar has fallen by 99%. It hasdevalued the U.S. dollar by 99%, i.e. 99% of its value has been devoured by Federal Reserve-created “inflation”.

Now this same entity is claiming that it is impossible to devalue the dollar any further – no matter how much new funny-money it cranks out from its crooked printing press. What does it mean when an entity devalues and devalues and devalues its currency, and then tells us it can’t devalue the currency any further? It means that this currency is already worthless. You can’t “devalue” a currency below zero.

In fact, the Federal Reserve has been competitively devaluing the U.S. dollar since the day it was born. It’s finished. Mission accomplished. The U.S. dollar is fundamentally worthless, based upon several different metrics.

The U.S. dollar has been hyperinflated to worthlessness, with the Bernanke Helicopter Drop simply being the proverbial “last straw”. With other Western currencies now being little more than fraudulent derivatives of the U.S. dollar, their own status is little different. However, let’s pretend otherwise. Let’spretend that these paper currencies are not already worthless, i.e. it is still possible for our traitorous governments to “competitively devalue” them even further.

As already explained; competitive devaluation = competitively reducing the exchange rate = racing to create price inflation. A price spiral. Competitive devaluation logically and mathematically implies a price spiral. You cannot have one without the other, they are two sides of the same coin. However, in a world of markets, such a price spiral will not be uniform. Some asset classes will spiral higher at a different rate than other asset classes.

We see this, even within the opaque fog of the Wonderland Matrix. Food and housing costs spiral higher, in what is clearly the beginning of a hyperinflation Death Spiral. Prices for other asset classes (notably manufactured goods) have risen much more slowly. A large part of the reason for this discrepancy was explained in a previous commentary.

The situation is different with respect to precious metals. Gold and silver are “monetary metals”. The true meaning of this phrase was also fully explained recently. As monetary metals, gold and silver mustfully reflect changes in our monetary system.

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