More Debt Won’t Grow the Economy

DRIGGS, IDAHO – The first week of January will go into the history books, for an invasion of the Capitol Building by a flash mob.

The final week of January will also go into the history books… for the flash mob that invaded the stock market.

Millions of amateur investors stormed the stock market last week. They cornered certain stocks and caused chaos. GameStop went up 236%. AMC went up 182%. Express rose 54%. Some hedge funds – who had bets on the price of these stocks falling – lost so much money, they had to be bailed out.

What’s going on?

It’s simple. Many Americans – especially young Americans – are disgusted with the way the country is being run, and they’re taking their anger to the streets (and the capital markets).

More below…

Modern Traveling Family

Greetings from our cabin in the backcountry…

We are a modern traveling family… drifting from place to place like seeds in the wind… never sure where we’ll go next.

We live in Airbnbs, bedsits, cheap hotels, and youth hostels. We educate our three children ourselves. And our only possessions are what we carry with us in our suitcase.

A few years ago, we put our entire life savings into gold and silver coins and “buried” it somewhere safe. One day, we’ll “unearth” this treasure and buy something with it. In the meantime, we’ll keep drifting…

We’re currently in the United States, after visiting more than 30 countries. We’ve been in the U.S. for almost a year now, unable to travel internationally because of the virus. We’ve been traveling around the different states instead.

As I write, we’re staying in an Airbnb next to a ski resort in the Teton Mountains. We like it here and it’s not too expensive. We’re going to stay here until spring and learn how to ski.

Penny’s “Yard Sale”

This weekend, we watched the kids go skiing by themselves with their new friends from our neighborhood. Off they went to get on the lift together in a gang of six.

When I saw them later, Penny had snow wedged in between her helmet and goggles like she’d just done a huge faceplant.

“Did you wipe out?” I asked her.

“She had a yard sale,” said one of her friends.

Had Penny had a yard sale while skiing with me, it would have meant tears and an immediate end of the day. I probably would have had to carry her home. I started to wipe away the snow.

“I’m okay, Dad,” she said. Then, she pushed me away gently. “Let’s go again!” She said to the other kids.

Here’s the gang just before they set off…

And here are Penny and Dusty resting by the car after a long day on the slopes with their new friends…

Anger in the Streets

Back to the anger in the streets last month…

U.S. policymakers have blown the greatest debt bubble the world has ever seen. Now, they’re desperately trying to keep it from deflating with more of the same policies they used to inflate it in the first place… cheap money and bailouts.

More than any other group, these policies hurt young people.

They hurt young people because they’ve hollowed out the real economy and inflated home prices… while protecting stock and bond owners with never-ending stimulus and asset inflation.

In these Postcards, we’ve been calling this the “greatest financial experiment in history.” It’s coming to an end now as a) we head into a series of recessions, and b) interest rates can’t go any lower.

Adding more debt doesn’t have the same effect on economic growth it used to. Foreigners are starting to bail… and they’re sending their money to China, instead.

One example…

News came out last month that China had overtaken the U.S. as the world’s top destination for foreign direct investment, a position the U.S. held for decades.

“The 2020 investment numbers underline China’s move toward the center of a global economy long dominated by the U.S.,” says The Wall Street Journal.

Two very important letters also appeared in The Wall Street Journal’s Opinion section recently, warning us about the path our policymakers are taking us down.

The first was by Hank Paulson, the former CEO of Goldman Sachs and Secretary of the Treasury, published at the end of December.

He titled his letter, “China wants to be the world’s banker,” and warned the U.S. dollar will lose its “primacy” if we continue with the policies we’ve been using.

The second was by Kevin Warsh, former governor at the Federal Reserve, published in early January.

He titled his letter, “Beijing’s bid for financial supremacy.” And he explained how China was hoping to displace the U.S. Treasury bond as the world’s most important and reliable asset with its own bond.

“Beijing isn’t yet ready to challenge the U.S. dollar directly,” Warsh wrote. “But it has set its sights on the U.S. bond market, which showed new vulnerability last year.”

Greatest Investment Trade of All Time

Regular readers already know my thesis on how this ends. I’ve repeated this again and again…

The Fed is going to use its money printer to buy every bad debt in the global economy and replace it with currency… until the currency starts to lose value so fast, and China’s capital markets take over, and the U.S. is forced to rethink things.

In the meantime, the feds are setting up one of the greatest investment trades of all time: selling paper currencies and buying gold and silver…

…and they’re setting up the U.S. for a lot more anger and chaos.

As I write this morning, silver is up 6.5%. There are rumors that the flash mob has turned to attack the silver market. This is just the beginning…

– Tom Dyson

P.S. If you haven’t protected your wealth against the synchronized global currency devaluation I see coming, I encourage you to watch this before it’s too late. I designed an entire model portfolio to help you position yourself on the right side of this trend as the U.S. dollar loses its value faster than ever before. But there’s more to it than just buying physical gold and silver…

In this urgent video presentation, I show you how you can get access to my model portfolio – with percentage allocations to build the ideal precious metals portfolio, plus the 11 mining stocks I recommend today.

Like what you’re reading? Send your thoughts to [email protected].

In today’s mailbag, more kind words for the Dyson family after the death of Tom’s mom, Teddy Dyson…

Reader comment: Dearest Tom, my heart sank when I heard of your mother’s passing. Our prayers are with you and your family. No words can help, although I offer this: Allow yourself to grieve, and lean on the Lord for comfort through this time of hurt. You’re on the right path. Spend these precious moments with your family, as you’ve clearly found you happiness in those moments. Blessings.

Reader comment: Dear Tom and family, somehow, because of the incredibly personal nature of your Postcards, I feel like I became an unseen member of your family (I am sure that many readers feel the same). I cried when I read that your mother passed away, and I am crying now reading your eulogy. Please accept my condolences. I am so sorry that you weren’t able to be there with her. She will be forever in your memory.

Good luck in all your endeavors. Looking forward to your continued writing. You cannot stop now, with so many people addicted.

Meanwhile, others appreciate Tom’s shipping thesis… and his take on the stock market’s real performance since the start of the pandemic…

Reader comment: Tom, I work in the shipping industry, although I am certainly no expert on the economics of ship ownership. I was quite interested in your tanker stocks play and see the logic of it.

Reader comment: Tom, I was impressed by you comparing a commodity to the stock market. I did it with oil dollars in February 2008 to see how a feather could knock over its perceived value to real value. Gold works well, too.

Tom’s note: As always, thank you for writing in! We read every note you send us. Please keep your messages coming to [email protected].