The Only Guaranteed Trend in Finance

REXBURG, IDAHO – It’s the only one-way bet in finance I know…

A “sure thing” for the next decade or so…

What is it? More below…

Where the Midwest Gives Way to the Mountains

Greetings from Idaho!

I’m writing to you from an Exxon gas station in a town called Rexburg. It’s a little farming town in eastern Idaho.

If it weren’t for the dramatic, saw-toothed mountains towering over us to the east (the Tetons) this town could be anywhere in the Midwest.

There are grain elevators and fields of golden wheat by the side of the roads. Giant farm machines block traffic on the roads. A neglected-looking railroad track runs through town. Most of the town’s energy is at the freeway exit. There’s a Walmart. And a handful of fast food restaurants there.

Kate and the kids are back at the camper eating breakfast and waking up. I’ve come to the Exxon station to get coffee. I’m waiting for them to brew a new pot. While it brews, I’m taking the moment to write to you…

An Unusual Sight in Our Travels

The campground we’re staying at is nearby. It’s called Beaver Dick Park. We’re paying $10 a night to sleep there. (“Stay 4 nights, get the 5th night free,” says the notice board at the entrance.)

There’s no running water or electricity for campers. The toilets are latrines. (A latrine is a hole in the ground with a small hut over it. They’re very common at campgrounds in the more rural parts of America.)

A homeless person is living in the spot next to us, sleeping in her minivan with her dog. Her van has Alabama plates.

In the three months we’ve been traveling around small-town and rural America, she is the first homeless person we’ve seen.

Our campsite has a volleyball court and disc golf course. Locals come over in the evening to play. We watch them from our camper or while we eat dinner. We’ve been playing volleyball and disc golf, too.

In a minute, I’ll return to Kate and the kids. They’ll do their schoolwork and I’ll keep working on this letter.

Tomorrow, we’ll pack up our camper and head into the Tetons. I’ll open the app that shows us every campground in the area, and we’ll find somewhere new to stay for a day or two.

The Only Guaranteed Trend in Finance

The one guaranteed trend in finance over the next decade or so is:

“More stimulus.”

First, central banks cut interest rates, ultimately to zero and – in some places – to below zero. They won’t be rising again for years.

Then they tried tax cuts.

Then, they used quantitative easing (QE), a form of stimulus first used by the Federal Reserve under then-chief Ben Bernanke. QE stuffs reserves into the balance sheets of banks and causes asset prices to rise.

Recently, they’ve started using another technique called “debt monetization.” That means the government borrows money from the central bank (which the central bank creates on a computer) and then spreads it around. People call this “helicopter money.”

The U.S. government (via its own Congressional Budget Office) has projected annual budget deficits of over a trillion a year for the next 10 years.

But if I’m right, this estimate is far too conservative. In order to stimulate the economy, why wouldn’t they run deficits of $500 billion a month?

I think they’re going to. Using the central bank’s printed money. And they’re going to spend it on infrastructure, manufacturing, farming, oil production, and bringing back jobs from China. And more tax cuts.

Ultimate Stimulus

The ultimate stimulus measure – one we haven’t really seen yet but which goes hand in hand with the point above – is currency debasement.

Currency debasement is when they intentionally water down the value of the currency. This temporarily gives the appearance of wealth and prosperity.

It’s fake, of course, but it can make an economy seem vibrant for a few years… or, at least, stave off a recession.

Some people argue that we’re going to get deflation and a depression. One day, they’ll be right. But it’s still a long way off. Before we get there, there’s going to be a lot more stimulus…

I think of government stimulus like a fly caught in a pitcher plant. The fly thinks it’s feasting on nectar. But it’s really sliding towards the bottom of the plant where it’ll be digested in acid. The fly doesn’t realize it yet, but there’s no escape…

As I’ve been writing in these Postcards, I don’t want to participate in this financial experiment. This is why I want my savings in gold and silver. Much safer to sit on the sidelines in gold and silver until the experiment is over…

– Tom Dyson

P.S. I won’t be staying in gold and silver forever. At some point, it’ll be time to get out of precious metals and back into the stock market. How will we know when? I lay it all out in this video presentation – including the steps I recommend taking today…

P.P.S. We met a family last night in Rexburg. They contacted us through my publisher and invited us for dinner. We had a great time. Here we are…

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

A few more suggestions for the Dyson family while they’re in the American west… and one longtime reader invites Tom to New Zealand…

Reader comment: If you have the opportunity, you should go to Thermopolis, Wyoming, home of the world’s largest mineral hot spring. It’s a nice small town with hot spring pools and a mineral bath fed by the hot spring. The trip through Wind River Pass from Riverton is amazing, too. If you head to Riverton from Casper, you’ll go right past Hell’s Half Acre. Always worth the time to stop.

You should also visit the Bighorn Mountains on the eastern side of the state and go to the Bighorn Medicine Wheel – would be very educational for you, Kate, and the kids. It’s beautiful country. You can’t miss Jackson Hole. And a trip over Sunlight Pass into Red Lodge, Montana is great; should still have lots of snow there.

Tom’s response: Thank you for writing in and providing your local knowledge. Perhaps this winter I’ll aggregate all the emails like this we’ve received and turn them into a road trip guidebook of sorts. Then I’ll give it away for free to anyone who wants one.

Reader comment: I started reading your and Bill’s newsletters in October 2019, and after sharing them with my partner, she decided to invest all her retirement savings into gold. This was a bold move as we are both retired and reliant on our superannuation, but she hasn’t regretted it. We particularly enjoy all your family travel stories and I am convinced you are just at the beginning not the end of it.

We live in the Bay of Islands, New Zealand, which we fondly call the adventure capital of the world. In fact, I have a website which promotes adventure activities throughout New Zealand. We are a small country, but every adventure possible is available here. Why not put us on your list for an extended holiday once international travel gets over the COVID-19 restrictions? We would love to see and welcome you all.

Tom’s response: We have not been to New Zealand, but I have always wanted to go. We tried to include New Zealand on our trip around the world, but it was just such a long flight to get there, and so far off our path. One day…

Meanwhile, others share their homeschool experiences after a European reader inquired about it…

Reader comment: We homeschooled our nine children through high school. When they went to college, they were thrilled to find it so much easier than homeschool had been. Seven of the nine have a bachelor’s degree, and five have advanced degrees.

College is easy if you teach your children to think, rather than teaching them what to think. Most homeschooled children are accustomed to teaching themselves, which further benefits them in college. I’ve been following your writings and enjoying them since The 12% Letter days, and have always enjoyed and benefited from them.

Tom’s response: Thank you for this letter. I read it to Kate and the kids just now – as I do with every letter we receive – to encourage her along this path.

Reader comment: Just wanted to comment on the reader question you received yesterday about college for your kids. We homeschooled our daughter and son all the way through high school. State law determines the amount of oversight the government has over your school.

We homeschooled in Montana and Arizona and there was little or no oversight. California declares authority over your children and actively manages homeschoolers. We had ultimate authority on what we taught our kids. When they were in the government schools we had some great teachers, and some not as great.

No one cared more about their education and wellbeing than their homeschool teachers, mom and dad. We had control of what was going into their minds and who they were exposed to. We selected their art and music teachers. They no longer had to be in class with the kid that was stabbing people with his pencil.

The running joke of homeschool is that people always ask, “How do they get socialized?” as if it is not possible without government intervention. Socialization was exhaustive as they had more friends than I can count.

There were two advantages: They were not restricted to having friends that were the exact same age, so they seemed better able to deal with older and younger folks. Second, we were involved in transporting them to see friends, so we were able to screen out some bad influences.

One disadvantage is that you have to actively go out and find group activities like music and sports that are a “gimme” in government school. A small trade off. Lastly, both of our kids have college degrees (one is a master in finance).

To prepare for college, you just make a report card for your kids each semester (they like report cards). That, combined with standard testing like SAT and ACT, will get them into college. Colleges are very aware of homeschoolers and they welcome them.

Tom’s note: Thank you for your notes and messages! We read each one you send us. Please keep writing us at [email protected].