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This Should Enrage American Workers |
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Dear Reader, |
Since 1998… how much value has American wages lost — against gold? |
Answer shortly. But first, we pause to reflect upon the present market delirium. |
Two Fridays past, the Dow Jones Industrial Average plunged some 900 points. |
Retail investors galloped in to "buy the dip." |
Do you harbor contrarian leanings? Then you should be girding for heavy weather. |
That is because extreme dip-purchasing is not a bullish indicator. It is instead a bearish indicator. |
A Warning Sign |
Market commentator Mark Hulbert: |
According to data compiled by my colleague Joseph Adinolfi, [two Fridays ago] "saw the biggest total buying by the retail crowd since Jan. 27, 2021… |
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This investor behavior is bearish, because willingness to buy market dips is a contrarian indicator: Market tops typically occur when investors treat dips as buying opportunities, according to contrarian theory. |
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It's just the opposite at bottoms, when investors refuse to believe that any rally is sustainable — therefore treating every uptick in the market as an occasion to sell more. |
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If it is evidence you seek… it is evidence you shall have: |
Data compiled by Yale University finance professor Robert Shiller confirms this contrarian argument. Since 2001 he has been calculating a "Buy-on-Dips Confidence Index," which measures the percentage of retail investors who believe that the stock market will rise the day after big drops. |
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As you can see from the accompanying chart, the S&P 500 on average performs far more poorly following high index readings than low ones… there can be little doubt that it's a bad sign that their rush to buy [this recent] dip is at a nearly five-year record high. |
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Be Fearful When Others Are Greedy |
Here is the chart referenced: |
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Yet as I am fond to state, climate is what a fellow can expect. Weather is what he actually gets. |
The foregoing does not forecast stock market weather. It merely suggests overall climatic conditions you may expect under present conditions. |
And present conditions suggest a looming climate of turbulence — at least as history runs. |
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Back to Gold and the Dollar |
Yet let us revisit today's central question. |
Since 1998… how much value has American wages lost — against gold? |
Here I offer you choices. Is the answer: |
A): 16%... |
B): 39%... |
C): 77%... or… |
D): 87%? |
Have you selected? |
The correct answer is C. American wages have tumbled 77% against gold since 1998. |
How do you like it? I hazard very little. |
Yet the gentlemen and ladies of InvestorsObserver have executed the mathematics. And the mathematics is the mathematics. |
The Anatomy of Dollar Decline |
Here are their central findings: |
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In conclusion: |
These final years of the 1990s represented American workers' last stand before the great devaluation began. Families could still reasonably expect their paychecks to provide genuine wealth-building opportunities, regardless of whether they lived in Connecticut's affluent suburbs or Mississippi's rural communities. |
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The systematic destruction of this purchasing power over the following decades would prove to be one of the most consequential economic shifts in American history, transforming a nation of workers with real financial security into one where even modest asset accumulation requires extraordinary effort. |
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Politics Is Downstream of Economics |
I believe there is justice in these comments. |
It is no stretching of the facts to claim that the great debasement "would prove to be one of the most consequential economic shifts in American history." |
Would a Donald Trump have been elected United States president — twice — absent the great debasement? |
I believe the answer is no. |
Nor do I believe socialist theories would seduce so many youthful Americans absent the great debasement. |
They feel as if they run in place… trapped upon the hamster wheel. |
They believe capitalism has failed them. |
Capitalism has not failed them — yet today's distorted capitalism has failed them. |
It is capitalism parading in false whiskers. And many cannot penetrate the disguise. |
Behind the disguise we find the Federal Reserve itself. |
The Honest vs. the Dishonest |
This institution is the custodian of the United States dollar — the very dollar that has shed 77% of purchasing power relative to gold since 1998. |
Thus the Federal Reserve has conducted a very poor custodianship of the nation's currency. |
Inert, idle gold does nothing but sit there… silent as the Sphinx… silent as the grave. |
Gold plays no tricks. Thus gold is honest. And gold's truth-telling embarrasses the Federal Reserve. |
That is because gold exposes their dollar mismanagement. |
For that precise reason they resent gold… as the dishonest fundamentally resent the honest. |
I prefer the honest to the dishonest. |
I prefer gold. |
Regards, |
Brian Maher |
for Freedom Financial News |
P.S. Here at Freedom Financial News… we promise you nothing. |
That's right, we promise you nothing. No mega gains, no overnight riches. |
And we don't apologize for it. |
That's because we live in the real world. |
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