Sound Money, Make Some Fucking Noise

Last night I saw a TV commercial portraying the pitfalls of the Fed printing money.

Twice during the NBA playoffs last night, I saw the same commercial talking about the Federal Reserve’s ability to print unlimited cash and the negative effect it has on Americans’ purchasing power.

Putting aside the fact that the commercial was advocating for Bitcoin and was paid for by Coinbase, which I would never use, the fact that the message about our flawed monetary policy has gone mainstream is stunning. And outright awesome.

Whether you’re a Bitcoin fan or a gold fan—or both—it shouldn’t matter. I’m 42 years old, and this is the first time in my life I can remember seeing television commercials pointing out the inconvenient fact that inflation is an invisible tax that works under the cloak of night to rob the average American citizen of their purchasing power.

Talk about the Overton window shifting a bit, eh?

As I’ve often said, the most nefarious thing about inflation is the fact that most people don’t understand it. And because of that, they (1) don’t actively try to fight against it using sound money, and (2) don’t generally get pissed off about it.

After all, most Americans are out there generating the productivity, goods, and services that the rest of us rely on—and that they use to maintain their households. Who has time to learn the intricacies of monetary policy when they’re just trying to put food on the table for their families?

The government and Fed like things this way, I’m sure.

Even though I own more gold and gold miners than Bitcoin, I have always given Bitcoin credit for shoehorning in a very important lesson on monetary policy to the main vein of a younger generation. From the 1990s to 2010s, only a couple of fringe cypherpunks and Austrian economists warned about the negative effects of our monetary policy and/or tried to engineer solutions. The Bitcoin movement has now helped usher that important message to millions of people who normally would not have involved themselves with it—and that is exceptionally important.

At this point, I realize that it isn’t sensible to expect an entire teardown of the Federal Reserve and monetary policy as it exists today—but rather, some small course corrections. And regardless of these course corrections—it is still extremely likely that we are going to continue down the path of further inflation and further money printing ad infinitum.

While “ending the Fed” might be a fruitless effort, empowering the everyday citizen with ways to preserve their purchasing power isn’t—and this is the message that the commercial got across got last night, and why I deem it a success.

Whether it’s Bitcoin or gold, people are now more aware of the fact that they have exit ramps from the existing monetary policy system now in a way that they have never had before.

Our current fiscal situation—and the resultant efforts undertaken by the Trump administration to try and correct the nation’s debt and deficit—also serve as a reminder that there are still some natural laws of money and economics that we can’t ignore and that will eventually usurp our brutally micromanaged markets and economy.

The ongoing trade war, which follows in the footsteps of the United States seizing Russia’s reserves some years back, is just another gentle reminder that the global economy is made up of dozens of powerful nation-states, each with their own level of adherence to these natural economic and monetary laws.

Tensions are higher, because awareness of how the monetary system — fueled by dollars and Treasuries — works is higher. Just a couple of weeks ago, the U.S. Treasury market came under intense scrutiny after relentless selling drove 10-year yields up in a manner that caught the attention of every financial bigwig in the Trump administration—as well as the central banks of multiple other countries around the world.

Just another reminder that the world’s awareness of monetary policy is as heightened as it has been in recent memory.

“Sure,” you might say to me, “that’s why gold has been raging higher for the last few months.”

Yes—but if I’m right, we haven’t seen anything yet. While some retail and institutional investors are starting to embrace sound money like gold, it has hardly become a mainstream story.

I still think we are in with the sound money early adopters, in more ways than one. This is why I have been harping about my feelings regarding gold nonstop for the last couple of years on this blog, and decade elsewhere.

Gold and silver miners still look ridiculously undervalued in my opinion, and gold itself has significantly more upside if the trend of awareness about monetary policy continues in the direction it has been going.

I believe that because of the trade wars, because of seizing Russia’s reserve assets, because of Bitcoin, and because of the quagmire of trying to manage our fiscal policy amid inflation, the world has been given a lesson on monetary policy in a way that it never has before.

Now, all we have to do is wait for everybody else to catch on.

When I saw the GDX spike over $50 per share in late trading on Tuesday, I didn’t think, “Time for me to start selling.” Instead, I thought, “The fuse is almost lit.”

That is to say, I still believe we are at a jumping-off point—a jumping-off point for sound money, and an inflection point for the public, where actively trying to avoid inflation eating at one’s assets becomes front and center not just in the financial world, but in the everyday parlance of the rest of the world.

I joked on my Twitter account that maybe CNBC would start talking about the GDX (gold miners ETF) when it hits $150 per share—triple its current price. That’ll probably be the place where I would look to start selling some of my position.

But we’ve got a long way to go to get there and a lot of people to get on board still.

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