The Real World of Money
Fred Dashevsky is from Long Island New York. He attended University of New York at Albany and studied psychology, political science, and economics. Fred started in the coin business in 1984 in Northern New Jersey opening several offices in Southern California in the mid 80s. He returned to the east coast in 1989 and opened Hilton head office for SDL Inc. in 1991 with partner Andrew Gause. He has since opened his own business, U.S. Coin Capitol. Give him a call for your numismatic gold investments 800.878.2646
Fed Reserve board meets today. Expected to raise interest rates ½ percent to 1% and to announce decision about tapering the balance sheet.
They can slow down the movement of money by becoming a net seller of bonds, which would suck excess money out. But to do so, they need a buyer to buy the bonds.
Trying to sell bonds to raise revenue for the Treasury and simultaneously do quantitative tightening in an open market with increased interest rates. A quandry.
Debt that is offered today is not high enough interest to cover current cost of inflation.
Volatility index has been over 30. Historically has been 7 or 8. Swings are because companies can no longer increase stock prices by buying back their own stock at near zero interest.
GDP is -1.4% this quarter. This is stagflation. Only worse situation is deep recession.
Normally stagflation can be cured by dropping interest rates. But we’ve already used that tool.
Fed can’t lower rates to fight inflation, so they can’t stimulate growth. Big money guys are betting on recession.
Recession is two quarters of negative GDP.
Fed needs to taper the balance sheet to give themselves room to borrow more.
Ukraine has created another inflationary problem and is depressing growth world wide. Russia had to scramble to pay off a $6 million debt in US dollars today. Ability to sell oil gives them capital reserves, though.
EU wants to ban Russian oil, but they need it. If Russia can’t sell oil, the sanctions become more impactful.
Record highs for US dollars because dollar looks more attractive than other currencies. But gold prices haven’t dropped. Huge demand for gold and silver.
It’s impossible not to see the inflation now. Vast drop in purchasing power. Ratcheting prices are buying opportunities for gold.
We need to have people continuing to want dollars.
Increased money supply was first signal of inflation coming.
On top of this, we have supply chain problems resulting from COVID shutdowns, shipping problems, and labor shortages.
Goods for the US come from outside sources. That squeeze adds to inflation. A snowball effect.
Trump recognized that being reliant on outside world production weakened us.
We are in an unprecedented economic environment. And the Fed is way behind the curve. Started late fighting inflation and now going too fast.
Why can’t China hurt us by trying to sell off US bonds?
10 year bonds sold for 1.4% interest 10 years ago. Bonds now selling for up to 3%. Older bonds will sell only at a discount.
Why buying numismatic coins makes sense in the current market.
Inflation wasn’t ever transitory, as previously claimed by the Fed. They knew it and were probably saying that to try to stave off bigger problems.
1:16 initial pricing ratio for silver/gold doesn’t mean much now, per Fred.
Gold and silver prices are a warning sign when they’re high. Means you can’t hide from the underlying problems.
During uncertain times, nothing weathers better than gold and silver. Need physical tangible assets. You must diversify. A long term investment. With numismatic coins from Fred, you get the actual physical product. Good opportunities on price dips. Fred has deals on bundled packages.
May 7, 2022 @ 3:04 am Jaye
Andy Schecman would be great guest. Discusses how to prep for what is to come