I’m going to touch on some things here that others may have covered over the last few decades. Maybe not. If there’s anything here you see that is a well known theory or the like, let me know and I’ll credit and cite it.
It’s 1:43AM and I can’t sleep. I had this thing rattling around in my head all night and I put on a pot of coffee. Going to be a long night. Edit – 6:27AM and still up. Been cranking this out and now trimming down.
What I am going to do here is spend some time flipping everyone’s perception of reality upside down. Big picture, is I want to spend a lot of time focusing on how our world SHOULD look like with gold at the center of it. Right now, we measure price in dollars. Everything is valued in dollars. But what if everything was valued in gold? Right now, I’m sensing a few Kinesis people sitting up in their chairs….go get a cup of coffee. The real main reason we went to paper currency was that it was a lot more portable than carrying around bags of metal. If all of this metal can now be stored digitally, it now means that we can skip the paper and go right to the gold and silver via crypto.
Side note here as the setup – I learned there used to be solar system models based on the earth being the center of the solar system. It looked clunky. All kinds of wicked and wild gyrations and movements. It’s called the Ptolemaic Planetary model and it looks like the below. This came from the time of Ptolemy in Egypt about 150AD or so.
Now, we all know our solar system looks like this…based on the Copernicus model in the 1500s.
The payoff for the setup here is that gold is the copernicus model that all of civilization has been founded upon and ran on for 5,000 years. And in 1971, they took us to the Ptolemaic model where a fiat US Dollar is the center of the financial solar system. Meaning, instead of us having MONEY at the center of our financial solar system we have FIAT CURRENCY. And things aren’t going as planned.
Check out the gif that compares these two…
What made me think of this?
Rafi Farber the other day had an interview with Palisades Radio, and he talked about how things were valued in gold. And, how dollars only have meaning because they can still buy gold. I’m going to REALLY build on that concept and perhaps take this 6,000 miles more than Rafi elaborated on, but I think I know where he meant to drive that bus. I was also in the chat tonight for Palisades when John Adams and Craig Hemke were on and I saw someone say, “they used to value things in gold”. Things just started going off in my head with charts and graphs. What does oil look like in the price of gold? Silver? Soy?
In Mike Maloney’s Hidden Secrets of Money, Episode 2, he goes over how most currencies pegged to the USD – which was pegged to gold at $35 with the Breton Woods Agreement in 1944.
Mike Maloney also had “wealth cycles” in which he had a sine wave illustrated. This is what a sin wave looks like:
Think about these peaks and valleys. Assuming this is 150 years ago, and gold backs the dollar. So when I bought things in the dollar, I was buying it in gold. This is how the market works, over time.
- Oil gets expensive in gold
- More people produce oil and enter market
- Additional supply becomes cheaper
- Brief period of balance
- Oil becomes cheaper in gold
- Supply is reduced
- Market participants leave
- People spend a lot of money relative to oil because it is cheap. Travel, storing it for later
- Demand increases, and price goes up
- Brief period of balance
- Cycle repeats
When a satellite goes around the earth, this is what it looks like
You can see how a cosine wave is formed moving ahead in time. This is the markets moving forward in time.
“This wave pattern occurs often in nature, including wind waves, sound waves, and light waves” – all of this is energy disbursement. Just like financial energy disbursement…More on that in future writings.
Gold and silver?
To start off, gold and silver have been money, so they would probably track closely together. And things like oil, silver, gold, platinum – these are finite resources, all of them. They become more scarce and harder to find. All of these should probably be in a class of their own for “stuff”. Something like “finite resources”. Now, some items like lithium may be plentiful, but they are finite. Then you have things like cattle, pigs, corn, soy – each year populations go up, but we also get better technology and agricultural methods. Maybe fuel costs go up as a big driver of their costs. Anyway – I would expect all of these, over a long enough time, to perhaps decline in price against gold. You become more efficient.
Lastly, I started then flipping the dollar to gold. How many grams of gold would it take to buy a dollar bill? Meaning, let’s look at the solar system through the eyes of gold, and not the almighty dollar. Mike also has a wealth cycles video where he discusses things valued against each other. Real estate in gold, etc. So some of this ground has been covered in a vacuum, but I’m going to posit that going off of the gold standard is what has led us to the strife we are at today in all of society.
What am I trying to show the reader?
I think that since it’s been 50 years since we have been backed by gold, there are less and less and less people alive daily who were at the peak of their careers when the USD was backed by gold. And, even in that format in 1971, it was only at 40%, and apparently there was no real reserve ratio or the like where this was tracked. So the USA printed and printed.
What I WANT to show them is how the system that was put in place in 1971 IS the reason for most issues in this country, and the world right now. I know it’s a catch all here, but let me explain in lay terms, what many were trying to capture in the US election of 2016.
- Only need single income households to live a prosperous life
- Good paying jobs you could have for your career
- Family time
- Less divisiveness
Now, depending on what side of the fence people are throwing bricks from, this got all kinds of convoluted. Let me explain why gold is the answer to achieving all of that. In the above situations, I’m going to explain what went horribly wrong after 1971. And then I plan to show the charts that I have yet to build and see in my head. Which should take the rest of the night. Let me tell you what I see from the above items…
- Only need single income households to live a prosperous life – today, you need two incomes, and over 50% of the population in this country is paycheck to paycheck. You need ridiculously expensive college degrees just to get an entry level job out of college that could put you on a path to perhaps saving for a down payment on a house in 10-20 years
- “good paying jobs” – are few and far between. You have the doctors and lawyers, of course, but if you didn’t do that, you had to be an entrepreneur and run your own small business. Or, go to many years of college and maybe 15-25 years into your career, you finally make bank. Most small businesses are being run out by healthcare laws, minimum wage, COVID, regulations, barriers to entry, and big box stores smashing them.
- Family time – with so many dollars needed to even buy a house, own two cars, pay utilities, and have two children that go to college, families have to commute further away, have to work more hours, and get less quality time with their children. Financial pressures can be a trigger for divorce, and over 50% of marriages end in divorce. Children of broken homes are less likely to be able to afford college and have a tougher path ahead of them.
- Less divisiveness – Today, everything is more divided than ever. Having low unemployment and prosperity among all tend to go a long way. When people fall on hard times, there can be a lot of reasons for it. Born into it, parents split, or just overall socioeconomic distress – all of these can be means of blaming others for whatever bad deal you are going through. Whether you were born with it or acquired it, blaming others for problems tends to lead to bad problems in societies like Germany in the 1920s. From this, come authoritarian regimes that promise to right the wrongs of the oppressors. This story has also played out in history more than Germany, so I don’t want to unduly punish my German readers for something that has happened all over the world, all throughout history. Russia, Rwanda, and Bosnia are some of the other recent examples.
What I can tell you is that when you watch Mike Maloney’s series – part two talks about the end of empires. That video I believe was shot in like 2013 or 2014, and he leaves it off at the end by stating we are at the 6th stage. I’d contend we are now at the 7th stage. OR – Mike could have called stage 6 too early because this was 8 year ago and I believe it’s POSSIBLE the currency debasement he’s talking about is NOW. This could potentially have the “silversqueeze” movement lined up with the “loss of faith” along with the unallocated running for the hills. So it is possible we are in stage 5/6, with stage 7 that can happen at any time.
While history may not repeat, exactly, the saying goes – “it sure does rhyme”.
What’s interesting is, I also watched a video of the 4th turning recently. According to that video, we are 7 years from the end of the 4th turning. Give or take a few years – it means potentially the next decade can be extremely terrible, followed by the 1st turning – which is that of hope.
This is what I was hoping for in 2016…
What I believe will happen from this whole currency thing is that we WILL go back to a gold standard, of sorts. I’m going to explain to you the most prescient lesson I’ve learned so far in my adult life with budgeting. My wife now hates me for it, but this is what it boils down to….
“We buy things we don’t need with money we don’t have to impress people we don’t like.” – Dave Ramsey
While Dave Ramsey doesn’t seem to be a big fan of gold, he needs to understand that what he is quoting there is life under a gold backed system. Why? because you cannot spend, what you do not have. A gold standard forces fiscal responsibility. A STRICT gold standard of 100% may not be possible today – because a fractional reserve system can work, to an extent, within reason.
In our world today, debt is the driver of GDP. I want you to really, really think about that. When I buy a house, banks are using fractional reserve lending to then issue me the money for that house, and GDP goes up. When I buy a car, I’m buying with cheap credit.
This is what the 10yr has done over the last 40 years.
What this cheap credit does is allow us to buy things. And, when credit becomes cheaper, we can then refinance our house to lower our monthly payment which frees up more money to SPEND.
My conclusion is that if you have a fiat based system, the currency will eventually run to near zero. However, on its way, those with means will leverage to the hilt and make exponential gains. Those in the middle to lower class actually have the inflation exported to them. Meaning – they might be making 3% more per year, but inflation could be 5% per year. Over 50 years, you start to see how a family could go underwater. And, how a second income is needed just to pay the bills and barely get by.
What you see from this is that a person working for 50 years, over time, loses wealth due to the cost of living going up faster than their wages. You are seeing the American middle class go from a class of creditors to a class of debtors in a single generation.
THIS EROSION of the earning power, I’d contest, is the root of all of the strife in the 4th turning. Or, at least this one. All of the socioeconomic tensions. The racial divides. The name calling. We live in the most privileged society on the face of the earth. It’s not perfect. But I can show you that pretty data set above that is the root of what is causing all of this. This is what the chart looks like….
That red line is your savings over time (which causes you to borrow more or get additional income streams in the household). The green is your wage increases at 3%, and the gray is the cost of living increasing by 5%. This is what has eroded the middle class for 50 years. Silently. Now, a good chunk of this inflation was in the 1970s, but I wanted to show you how this looks like from a 50,000 ft view.
What you notice is that in 1971, you made 20k, but 10k you were putting in savings maybe drawing 5% interest. Perhaps this was long term savings. For a rainy day. See, at this point in American history, we didn’t have the need for 5 TVs in a house, 3 cars, $15,000 Disneyworld trips, McMansions, $200 designer sneakers, $800 game systems, or a need for $300 headphones. It was a more simple life. Where people didn’t borrow their left testicle in order to survive. They lived within their means. They were children of the depression, so they learned how to be frugal. And – there were real interest rates, both on mortgages and savings accounts. Pensions were a thing, because they could get good returns.
All of this changed in 1971, by going off of the gold standard. Mike Maloney mentions in that video, that it was more or less needed to be done, or else we’d have a complete currency collapse. See – the problem of going off of the gold standard is reactionary to….spending too much.
This shows you an example of how a 3% raise every year coupled with a 5% inflation rate could cause this issue. Most people I know are lucky to get any kind of raise anymore – maybe a 1% “bump” or 2% “cost of living” raise. Meanwhile, you are visibly seeing prices of rent, food, power, groceries, wood, medical costs – all going up around you. Also – your employer may have used to pay 90-95% of your medical, and that’s now down to 80% if you’re lucky. And, those damn co-pays are now through the roof!
Side note: I’m only going to spend a paragraph or two on health here, but I have 135+ health writings on my blog to support a lot of what I’m about to say. Today, cancer in the US affects 1 in 3. Heart disease is the leading cause of death. Going back to 1890, cancer was 1 in 30 and heart disease was not near the top. Furthermore, in 1890, diabetes was a rather rare disease – according to Gary Taubes, and now it affects nearly 60% of people older than 40. My mom had diabetes, and I blamed that for her pancreatic cancer. You learn a lot of cancers feed on sugars. Sugars were now plentiful and in everything. Industrial lubricant called “vegetable oil” now is used instead of butter. We deep fried everything for 40 years and got dosed up on trans fats with hydrogenated vegetable oils. In order to produce beef cheaper, they are no longer eating grass their whole lives, but “feed”. To make chickens cost less, millions are put in a barn and never see daylight – and not fed bugs and worms, which is their natural diet. With inflation coming as we were going off of the dollar, the USDA approved the “food pyramid”. It has never actually been tested to work, but you were told to comply to this. Given our bodies have zero needs for ANY carbohydrates to live – only fats and proteins, it is surprising to see what the food pyramid is made of. A base of grains, starchy vegetables, sugary fruits – and the meats we DO eat have 5-10x the omega 6 content because it is cheaper. Our bodies are raging with inflammation. We are constantly on sugar binges. We are gaining weight. We give ourselves metabolic disease. We consume massive legumes and suffer autoimmune disorders potentially as a source of this….And this is the cause…
Gold…..and going off of the gold standard in 1971 culminated in raging inflation for a decade. In fiat dollars. And people needed cheap foods to keep from going hungry.
What you saw about 15 years after sugar hit the mainstream with coke and candy, diabetes started up rampantly. After you introduced industrial lubricant in vegetable oil as a “healthy” oil, and compounded that with all of the smoking and sugar bingeing, you then have heart disease everywhere. And now, the piece de resistance – when you introduce a high carbohydrate diet into a sedentary culture with little fiat dollars in the budget for food, you have people buying cheap meat with high inflammation, cheap carbs, and cheap boxed processed foods. And…there is where you get your 60% obesity rates in the US. All of this metabolic disease has led to skyrocketing medical costs for the population…
Which has led to trillions in overhead costs….
Yet that is somehow not reflected in the inflation index? For YEARS, I was getting 2% raises, and seeing 8% jumps in my medical costs, rents, and food.
All of this leads to poor health. Cancer costs. Heart attacks. Diabetes. Alzheimers.
So we demonize people with means because times are getting tough and want to blame them for being evil. We want to blame someone. We want to blame the rich “racist” republicans who obviously want to enslave America. Or, we blame the “woke left” who want to take all of our money with taxes and give it to illegal immigrants and people who don’t want to work. You see – if you REMOVE the debt problem, you remove the friction. Just like if you remove a debt burden from a marriage, perhaps they stay together. If you increase the savings, then perhaps there’s more family time and junior doesn’t go shoot up a school because he’s constantly amped up on sugary drinks that may have caused mental health issues no one was tracking. For the record, at 12 years old in the early 1960s, my mom took a rifle to school for show and tell. For whatever mysterious reason, guns didn’t just shoot off on their own. Something happened to kids in the 80s, 90s, and since then. Mental health has declined, and no one sees the food, financial stresses, or work stresses contributing to this decline. It just seems to make more sense to disarm 100m law abiding people because a handful of people a year go kookoo for cocoa puffs. Then, trying to disarm these people now puts them on red alert for government abuses that our founding fathers warned of. While they also put gold and silver into the constitution as well. I digress….
But we now have a hypothesis here, of sorts. That much of the rails went off in 1971. I talked about looking at this from gold’s perspective. Let’s look for signs of turmoil in the price of gold. First…..
Let’s flip this whole thing around. We are going to see the price of gold in dollars….and then the price of dollars in GRAMS if we needed to buy a dollar with gold.
What this is saying is, as the years go on, it costs me less and less gold to buy a dollar. I am seeing an “asymptotic equation” in my head. I love these. These are sort of like….”a frog is 6 feet from a wall. If he jumps halfway to the wall every time he jumps, how many jumps will it take him to touch the wall”. The fact is, it can never ACTUALLY touch the wall. This is what it SHOULD look like…
So let’s see what this gold thing looks like….
You see at the first red circle is when they made gold illegal and took gold from $20 to $35. That was fun. The second circle shows you when we went off of the gold standard. And the third circle shows you circling the drain of this whole experiment where the frog is a micrometer from the wall and everyone for some reason thinks it’s a great idea to keep spending. We are at that wall. Now. Meaning, it’s fractions of a fraction of gold to buy a USD.
So, take a look at all the charts you want. Cancer rates. Obesity rates. Diabetes rates. Poverty rates. Heart disease. Alzheimer’s. Autism. Education rankings. Industrial production. Debt. By just about every single metrics you can think of, our country as a whole is far worse off than in 1971. All of that has been exchanged for modern convenience and work efficiency through information systems.
Now, one can say, “but Nate, inflation happened in the 1970s!”. True. But inflation of the dollar. I wonder how gold tracked with other commodities?
So if the dollar is the constant between gold and silver, I can simply divide one by the other, right? That’s essentially what we all know as the gold to silver ratio. We know this has peaks and valleys – it’s a function mostly of silver’s dual value of being an industrial commodity as well as money. When times are good, the industrial usage is higher, and it tracks closer to its commodity price. When times are bad, it tracks closer to money. So let’s look at 1980 and 2011 where both appeared to act as money.
In 1980, gold peaked at 835 I see in one source and silver at 49, giving a 17:1 GSR
In 2011, gold peaked at 1923 and silver at 49, giving it a 39 GSR.
The 100 year mean is 33:1. This would indicate that even at its peak in 2011, silver was severely undervalued to gold. I’m going to skip the manipulation for this.
Point I wanted to bring up here is that gold and silver track pretty correlated to one another. Gold usually kicks in the door, and silver follows later. So they can be offset by time and not line up on a chart well. But – they are both money, and they are both a commodity for things like jewelry. Silver has far more industrial uses than gold, but you get the idea.
What I instead would like to do is use gold alone as a proxy for money and discard silver due to it’s dual role that switches. What I’d like to do is try and track gold against other commodities.
What about oil? You see oil in dollars…
That looks to be getting crazy expensive in dollars. Meaning you have to take more of them out of your wallet to pay for gas.
But what happens if I measure this in gold?
Over 75 years, it’s an average of 2.13g of gold per barrel and trending down the last 10 years or so. If you look closely, it doesn’t usually venture more than 20% up or down. This past year is when oil hit -$37 per barrel and looked to be the cheapest year ever for oil, if bought in gold.
In the dollars chart, you see an increase in cost, over time. In the gold chart – it stays within a channel over 75 years +/- 20%.
Remember, this, like gold, is getting more scarce and harder to find. What about a copper or something like that in the same boat? Probably like oil?
With copper, once again, you see rising prices in USD. Remember, your paycheck being eaten?
What if we price this in gold? To me, this looks like copper gets cheaper to gold. More gold in your pocket!! Look how steady this is though from the time we went off of the gold standard. Looks to be almost a constant. Avg for a pound of copper is .15g of gold. mostly taken higher by the pre 1971 time frame – but this seems to track almost parallel to gold.
Let’s take a look at corn in dollars. As expected, prices rise!
What about corn in gold?
Very similar to copper – drops off a lot during the 1970s. Meaning – as prices were getting higher in dollars, they were getting lower in grams of gold. And…you can see it get even lower the last 30 years, perhaps the efficiencies I was talking about. Still…look how flat this is.
Now, let’s look at your purchasing power if you were paid in gold grams (troy ounces times 31.1).
We start with 1971 at $20,000 for your salary above. At the end of 1970, going into 1971, gold was $43.48 per ounce. Or, that is 16,613 grams. Lets say your salary in gold did not change over the last 50 years. How many USD would that buy if you were being paid in gold? This assumes a constant pay rate of 16,613g. What does your PURCHASING POWER look like if you were to take that gold and buy USD?
If you are squinting, don’t worry – I’ll fill you in. You are extremely rich.
This is something that is very dear to me, right now…
What I have demonstrated in this exercise is that if we paid our people in gold/silver, or the currency backed by them, that we will not inflate away the value of our time and energy. We work more, for less spending power, year by year. This has not only destroyed the health of Americans, but their family units as well. Skyrocketing costs in health problems coupled with dietary issues have caused a breakdown of society which may contribute to the end of the 4th turning.
With the 4th turning sure to really cause a hoot, here are some closing observations for what we need to look at on the other side of the shit show that’s going to happen. God, I hope not, but what could we see as the new way ahead? I learned my lesson to not put HARD deadlines on things, but I do love Dr. Michio Kaku and his “futurism”. I think it is reasonable and rational to trace a lot of our issues to 1971. It would stand to reason then, that if this is corrected, or if we rebuild in the pre-1971 model, it could then reverse a lot of the damage that was caused.
End of part 1. Questions for you. Homework….
- What do you think the effects of going off the gold standard have been?
- Do you think we could ever go back to a gold standard? Why? Why not?
- Do you see a system like kinesis, where you can pay in fractional gold and silver, to be a viable means of exchange in the future?
- If governments will not back their currency with metals, could privatization of money work – like lode/kinesis?
- Could you see us near the end of the empire? Anything you would do to save it?
- (My part 2) – what do you see coming as part of a currency reset? What would YOUR gold-backed Utopia look like? Assuming the first turning is all happy and smiles, what would you think this looks like?
- Does anyone know of any great studies of massive amounts of things valued in gold? I know Mike Maloney valued real estate and the Dow to gold. Wondering if there are massive databases anywhere of this, or any books/studies on this?