Scarcity
“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” -Thomas Sowell, economist.
The USA and the Western World are beginning to experience the consequences of printing money and lockdowns: scarcity. Add in the Suez Canal being blocked and J Powell should hit his 2% price inflation target.
Cargo ships are bringing goods to the USA but are leaving empty because the USA are printing money to buy things from foreigners instead producing goods and services to trade. So the ships are leaving empty, raising the price of importing goods to make up for the lost profits from no longer being paid to transport exported goods from the USA.[1][2]
Far from the world powerhouse of 1945, the USA are mostly comprised of people who live off of taxes (government employees, welfare recipients, and stimulus cheques).[3]
Because the USA have had the world’s reserve currency since the 1944 Bretton Woods agreement, foreigners are willing to sell us goods in exchange for our paper money.[4]
So long as foreigners accept our dollars (E.g. China and Saudi Arabia), they’ll keep selling us things we need (E.g. Chinese products and oil). If the USA keep printing dollars endlessly, they will raise their prices or use alternative currencies, including gold and silver, with which to trade. The USA consumes more than they produce because people want the dollar. Once that ends, there will be a scarcity of imports.
Goldman Sachs has even released a graph with predicted or actual price inflation (via Zerohedge):[5]
Semiconductors are made of gold and silver. This could add to demand for silver that the bullion banks may not be able to meet. In fact, over the past two months, the US Mint, the Australian Perth Mint, and the British Royal Mint are all running low on gold and silver.
Reuters put out an article detailing,[6]
“The United States Mint said on Tuesday it was unable to meet surging demand for its gold and silver bullion coins in 2020 and through January, due partly to pandemic-driven demand and plant capacity issues
[…]
For this year, the U.S. Mint has a limited window to produce its current gold and silver coins, with redesigned coins expected to debut in the summer. It is limiting distribution of its gold, silver and platinum coins to specific dealers because of heavy demand, and a limited number of suppliers of metals, it said in a statement.”
The Perth Mint put out a post stating,[7]
“The current scenario, in which some Perth Mint physical products are temporarily unavailable, does not equate to a shortage of metal at The Perth Mint, or in world wholesale markets.”
There isn’t a shortage, but at current prices, they can’t get a hold of enough metal to sell? Sounds legitimate.
Continuing, the Perth Mint states,
“What it actually reflects are constraints in production capacity here and at other bullion mints around the world to fabricate enough silver as finished bullion product.”
So there is enough silver, it is just owned by other people or is being bought to be used in industry, like in semiconductors?
The Royal Mint states,[8]
“Andrew Dickey, Precious Metals Divisional Director at The Royal Mint commented: ‘We are experiencing unprecedented demand for gold during these extremely difficult times as our customers are choosing to allocate more of their portfolio to safe haven assets. Whilst we are not in a position to predict the future performance of gold, we know that the precious metal has stood the test of time and managed to hold its own during previous periods of market turmoil.’”
On top of this, yesterday, March 23, 2021 (1 year after the stock market bottomed), a cargo ship named Ever Given of the Evergreen Marine Corporation got stuck sideway in the Suez Canal, which sees 12% of world trade volume moved through there.[9]
That will cause shortages the longer that it is stuck. The solution to shortages/scarcity is to pay a higher price or to produce more.
The USA already made that decision in 1971. As the Federal Reserve continues to print money, nations with oil and produce (Saudi Arabia and China) will look for other alternative currencies, including gold and silver. The USA consumes more than they produce because people want the dollar. Once that ends, there will be a scarcity of imports.[10][11]
Poverty is the natural state of mankind. Scarcity always exists. Printing money only works so long as people are willing to sell their scarce produce for it.
Learn a trade or hold real money.
“But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against ‘real’ goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.” -Ludwig von Mises, Human Action (1949), page 428.
[1]https://www.cnbc.com/2021/01/22/shipping-container-shortage-is-causing-shipping-costs-to-rise.html
[3]https://www.hamiltonmobley.com/blog/ivycva7i7sg00urep0g1jytllrsety?rq=kudlow
[4]https://www.hamiltonmobley.com/blog/r9tu385c22azkxuycdia7o3kludljh “If the Federal Reserve continues to print money, nations with oil will look for other alternative currencies, including gold and silver, with which to trade their oil. The petro-dollar will end. The USA will no longer be able to print money to buy the imports. The USA consumes more than it produces because people want the dollar. Once that ends, the 200 years of English world dominance (1763-2019) will end too.”
[7]http://www.perthmintbullion.com/us/Blog/Blog/21-03-17/No_silver_shortage_at_The_Perth_Mint.aspx
[8]https://www.royalmint.com/stories/invest/covid-19-and-gold/
[10]https://www.hamiltonmobley.com/blog/keynesianism?rq=keynesianism
[11]https://www.hamiltonmobley.com/blog/2dieds5fe71lfz75n48wh6v0co2eto
