When I look at the following two charts it tells me a story. First, the velocity of money is slowing down in the States AND yes the Fed did raise interest rates (December 2015) at a time when the U.S. economy was already slowing down. The downward trend on THEIR OWN CHARTS was already showing up from Q2 2015. From what we see on their own chart it’s not going to get any better any time soon.
Second, let’s look at Harpex. Harpex tells us container shipping movement. Simply put, container shipping more or less equates to the movement of consumer or manufactured goods. It answers the question of “Are people buying goods.” If consumers are buying, we see Harpex going up. If consumers are not buying we see Harpex go down.
Low Harpex numbers suggests that people are not buying consumer goods like electronics, refrigerators, clothing, household goods, etc., the way they normally would.
Logically, we can reason that smaller businesses or businesses that are getting tight on credit that sell these manufactured goods may not be doing well. We can safely assume customers are not buying and businesses are not putting in purchase orders and are perhaps holding inventory. This means more than likely that service industry jobs will have to support displaced workers in the very near future if not already. Or, government will get bigger by becoming an employer. And if you’re an American, that means higher taxes or a cut in benefits for you and me to pay these new salaries. So when we hear how Obama created jobs, it’s not entirely a good thing and that’s why they never tell you what exactly those jobs are that were created.
Nonetheless, if Americans are not buying, China’s economy will slow down, indeed all economies may slow down. Governments all over the world may have to find ways to get money into the hands of their people and businesses in order for them to spend it and get the velocity of money moving again. Alternatively, devaluing currencies would also continue as it is a seemingly preferred option. This will give the facade of a strong dollar in a very real and very weak U.S. economy.
The dangerous part in all of this is the Fed talking about raising rates. If they raise it another time on the same downward trends we see in these charts, liquidity surely will tighten up, more businesses will fold, and this will impact the whole world much more severely.
Furthermore, if the U.S. decides to print more money (QE), people at some point will ask themselves, why should I work if money is printed willy-nilly? Whats the value? Countries may and will lose faith in the U.S. dollar and perhaps not want to use it or hold it at some point. Likewise they too will ask “What’s the value?” They might even turn toward another currency they find more favourable causing an astronomical amount of endless (and useless) U.S. dollars to be sent home guaranteeing hyperinflation in the U.S.
Admittedly , whether this analysis or personal opinion is right or wrong, it does show we are truly coming to an end of the debt based finance system. These two charts are showing us that the average person cannot take on more debt. The only ones left to take on more debt are businesses, banks, and governments…and all of them are already doing that. Governments and central banks will keep printing in an effort to keep this current system alive.
Alternatively governments or central banks will adopt a negative interest policy. Negative interest rates means you will pay a bank more for the bank to hold your money…absurd right? They’ll do this in part because it forces people to remove money from their bank account with the hopes that they will spend it (or lose it) thus speeding up the velocity of money. The problem is when you and I continue to work the same amount of hours each day but our money starts to buy us less and less, it’s just a matter of time before complete faith is lost in the debt based financial system. In a nutshell, we all need to store the value of our money now before it’s value begins to fall at a quicker rate.
Knowing this, what are you doing to store the value of your money before all confidence lost? Storing the value of your money in silver and gold is a great start. Why? Well, despite the daily highs and lows we see in the spot price each day, these two metals have a history of being both money and storing monetary value over long periods of time. That alone is more than a good enough reason to start turning some of your paper cash into real, true, historic, and honest money that people all over the world know.
Take care of each other and be a blessing to all,