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Hyperinflation and the End Game

Rafi Farber’s videos can be found on his YouTube channel and on ArcadiaEconomics Rumble channel.

Fiat Money Jubilee

We are getting very close to the END AS WE KNOW IT! The US Dollar, the world reserve currency, is rapidly inflating and will soon implode. I recommend you watch some of these videos put out by Rafi Farber, the End Game Investor.

Hyperinflation

Below Rafi answers the question many people ask me: How can we buy goods and services after the dollar crashes (goes to zero value)? Gold and silver are money, always have been and always will be.

Are you preparing for what is coming?

The following is excerpted from Rafi’s website: https://seekingalpha.com/

The End Game Approaches

Lean libertarian? Fan of the Austrian School? You’ve come to the right place.

You know that the failure rate of all paper money systems throughout human economic history is 100%. 

You know debt cannot be accumulated forever.

These are facts of life as inescapable as our own mortality. The bankruptcy rate among all individuals, companies, institutions and states who continually accumulate debt is 100%.

There is nothing new under the sun. And the sun is about to set

The purpose of The End Game Investor is to prepare you for the setting of the sun on the US dollar, and to shield you as much as possible from the inevitable consequences of human monetary hubris.

The big question of course, is How far away are we from the setting of the sun? If I knew the exact answer to that question, I wouldn’t need to sell subscriptions to a newsletter. But as an End Game Investor, I have both a fair idea, and an emotionally stabilizing strategy for dealing with the uncertainties of market timing. 

The Strategy

The first thing to understand as an End Game Investor, is what gold is, and what it is not. Gold is not:

  1. An inflation hedge
  2. A store of value
  3. A unit of account
  4. A doorstop

Gold can indeed function as these things but what it actually is, is money, pure and simple. Even now, when you use dollars, you are using gold substitutes. The dollar only has any market value right now because it can still buy some amount of gold. The dollar was born as a gold substitute, and it will die when it is no longer a gold substitute.

When the dollar can no longer be substituted back into any amount of physical gold, the dollar becomes worthless.

That day is fast approaching.

Your objective is to collect real money now, and real money producing capital, meaning the right mining stocks, before money substitutes like the dollar, and all other paper currencies, die. When they do, real money will be in the absolute highest demand above anything else, because without real money, trade is impossible.

When you accumulate real money-producing capital, you are enabling yourself to accumulate more real assets than you ever thought remotely possible when the End Game hits.

In Weimar, for example, in 1923, you could buy a nice house in Berlin for about $100, or about five 1oz gold coins. The same will happen again.

As for trading strategy…

I’ve been in and around the market timing world for 15 years and I have studied system after system of timing strategies. Most of them are successful some of the time. None of them are successful most of the time. The trading strategy of the End Game Investor is not, primarily, based on chart patterns. It is based primarily on emotional patterns.

We hold a core of physical precious metals, mining stock positions, and some other commodity stocks. We trade above that core positioning with up to 30% cash. As our stocks fall, I increase allocations with available cash. As they climb back up, I increase cash. Through it all, we hold the core.

Sounds simple enough, right? Not so much. As your positions fall, the last thing your emotions want you to do, is buy. And when your positions rise, the last thing your emotions want you to do, is sell. But if your mind is strong enough – not to ignore emotion, but rather to use it as your buy and sell signal, then you’ve got it figured out. My job is to help you become that person.

I, just like anybody else, get scared and greedy. All the time. But when I feel scared I buy. And when I feel greedy I sell, holding the core positioning the entire time up to and through the End Game.

The When

Here’s a chart that may look familiar but you’ve probably never seen before. It’s not the Fed’s balance sheet.

This is the amount of Treasuries alone that have been that have been added to the Fed’s balance since the post-Covid money-printing era began. $2.7 trillion. And how much Treasury debt has been issued since then? The answer is $5.1 trillion.

That means over half of all debt issued since the Covid era began, has been monetized by the Fed.

And who bought the rest? Foreign governments? Nope.

Local government? Nope.

Individual investors? Certainly not.

The runner up to the Fed is actually mutual funds.

Here are the numbers from SIFMA of outstanding Treasuries held by mutual funds since the post COVID-19 era

That’s another 23% of the new debt since Covid, stuffed into mutual funds and ETFs. Add that to the Fed’s 55%, and that’s nearly 80% of all new Federal debt since Covid being snapped up by the Fed and mutual funds. There is nobody else buying this paper, because nobody else wants it.

And what does that mean? That means when the Fed starts to taper, mutual funds are going to stop accumulating, and the price of Treasuries is going to collapse. And when does that happen? When price inflation finally forces them to stop monetizing the debt.

That’s coming. And soon.

How can we know? Because the final stage of a hyperinflationary collapse always begins with psychology. With expectations. A loss of confidence. People start spending more because price inflation accelerates, and a positive feedback loop begins.

This is starting to happen now, and it is what Austrian School economist Ludwig von Mises called the Crack-Up Boom. His student, Murray Rothbard, put it this way in his Magnum Opus on economics, “Man, Economy, and State”:

Eventually, the public begins to realize what is taking place. It seems that the government is attempting to use inflation as a permanent form of taxation. But the public has a weapon to combat this depredation. Once people realize that the government will continue to inflate, and therefore that prices will continue to rise, they will step up their purchases of goods. For they will realize that they are gaining by buying now, instead of waiting until a future date when the value of the monetary unit will be lower and prices higher. In other words, the social demand for money falls, and prices now begin to rise more rapidly than the increase in the supply of money. When this happens, the confiscation by the government, or the “taxation” effect of inflation, will be lower than the government had expected, for the increased money will be reduced in purchasing power by The Economics of Violent Intervention in the Market 1019 the greater rise in prices. This stage of the inflation is the beginning of hyperinflation, of the runaway boom

Until COVID-19 shut down the world, the answer as to when the dollar would finally meet its end was unclear. Now it is much clearer. We are now in the final stages of the collapse of the fiat money bubble that began in 1971. There is still time to prepare, but time is short. When we look back 10 years from now, in hindsight it will all be obvious. Better to look back having prepared just in time, rather than to look back in poverty, pain, and regret.

Why Is this the End Game, Why Not Just Another 2008?

Yes, money-printing sort of worked in 2008, because the bailouts went to the top of the structure of production, the banks, and not to consumers. This time the bailouts are going directly to consumers, with enormous child stipends and unemployment largess all being sponsored by Fed money printing. It’s going right into commodities and the cost of living.

Back during the bailouts of 2008 the money supply did not move that much. It was on the same trajectory it was for years. There was a little bit of a bump at the end of 2008 but then a slowdown in 2009 kept the money supply growing at pretty much the same rate throughout. See below, money supply growth before and after the financial crisis.

Now it’s different. This is the end stage of a currency collapse. We have gone parabolic, and there’s no reversing that.

Here’s How it Goes Down

Price inflation is accelerating. Shipping prices have only just now started going parabolic as well, and this hasn’t even been factored into the CPI yet., which as of the latest reading is 5.4%.

At some point very soon, the Fed is going to be forced to taper and raise interest rates. Once it does, asset prices of all kinds, will collapse, along with the banking system. That will spur one last round of money printing that will destroy the dollar. My job is to get you to that point intact.

From the looks of it, the End Game can be measured in months. Not years. The next few months are going to take an emotional toll on us all. I’m here to guide you through it all with a clear head, not distracted by bubbles.  

The goal and entire purpose of The End Game Investor is first and foremost to protect your wealth in real terms as this surreal process unfolds, and secondarily to help you profit significantly from the dollar’s inevitable and impending collapse.

Not as doomish as me? That’s fine. But for your own safety, you’ll want to see what I’m doing to protect my subscribers. 

What You Get

The End Game Investor is very straightforward with few bells and whistles. New subscribers have an introductory discount of 20% off the regular rate for the first year. Regular pricing is $36/month $288/year. When you subscribe you get a 2 week free trial. Immediately when you sign up for a 2 week free trial, you will get:

  • Two model portfolios, one conservative and one aggressive so you know exactly what I’m buying and selling, how much, and when.
  • Daily market commentary focusing on the precious metals sector, monetary policy, and their interplay with commodities, bonds, traditional equities, and currency markets as applicable
  • Broader and more fleshed out market reports on the weekends recapping the events of the week
  • Open lines of communication with me
  • Real time alerts to changes in the model portfolios

The Upshot of The End Game Investor

I am a student of the Austrian school of economics founded by Carl Menger in the 19th century and popularized by Ludwig von Mises in his magnum opus Human Action, and Murray Rothbard in his own work, Man, Economy, and State. These works are the cornerstones of modern day libertarian economic thought. My investment philosophy is based on this school of thought.

The upshot is that the “end game,” which these economists have long predicted was coming, is now imminent. Meaning, the massive Keynesian inflationary bubble that the Federal Reserve has pumped up for nearly 50 years since 1971, is about to explode. For good. It is never coming back, not in any of our lifetimes. If you are at all concerned about preserving real wealth as this historic half-century-long misallocation of capital resources completely unravels, then subscribe to The End Game Investor.

If, however, you do not at all believe that the current monetary system is on the verge of complete collapse, then this is not the service for you. Mainstream investing would be a better fit for you, at least until it becomes obvious that the monetary system is undeniably unraveling at the seams. When galloping or even hyperinflation actually hits, then by all means come back here and subscribe, but I won’t be able to help all that much at that point.

If you are somewhere on the fence and aren’t quite sure what’s happening, but you suspect that hyperinflation or at least galloping inflation is a distinct possibility, then I urge you for your own financial safety to sign up for a two week free trial so you can see the model portfolio and understand what I’m doing to prepare my subscribers.

Gold Has Outperformed the S&P 500 Since 1971

How can we be so sure it’s all a giant bubble? I can show you this visually, very simply.

Not many realize this, but gold has handily outperformed stocks ever since the last vestiges of the gold standard were scrapped in 1971. The chart below from Bloomberg shows this conclusively. The grey line is the S&P 500 in dollar terms. The black line below it is the S&P 500 priced in gold. Priced in gold, stocks are now 40% lower than they were in 1971. Nominal stock market gains have been nothing more than a protracted – and unfortunately for most – convincing illusion. That illusion is about to turn into a veritable nightmare

https://static.seekingalpha.com/uploads/2020/5/11/3605901-15891991496910415.png

There’s something even more amazing though, and that is this:

Since the beginning of this century, gold has outperformed the S&P 500 by over 350%, even taking dividends into account.

The chart below shows the S&P 500 Total Return versus gold, from October 2000 until July 2021.

Chart

Over the last 20 years, the S&P 500 plus dividends reinvested has returned 352%. In that time, gold, sitting in a vault and earning absolutely nothing, has risen by 561%. It’s not even remotely close. By investing in dividend-paying stocks over the last 20 years, you lost about a third of your wealth in real terms. 

Here’s another “crazy” fact few realize. Warren Buffett is known not to like gold very much. Maybe that’s because gold has outperformed the Oracle of Omaha this century as well.

Chart

So you’re saying that all you had to do to beat the best investor ever, was to buy gold? Yeah, that’s exactly what I’m saying.

So What? Why Subscribe?

“So what?” you could say. “Gold outperformed Buffett. Just buy gold. Why subscribe?”

Indeed you could just buy gold and leave it at that and you should be basically fine. If that is your choice and it is this marketing pitch that has convinced you, then I consider my efforts here a success.

Nevertheless, you’ll want to subscribe because there is more to it than just that. Protecting purchasing power is pretty straightforward. Buy physical gold and silver, store it in a safe jurisdiction, and wait. Still, the opportunities stemming from what is happening now are enormous if you know what you’re doing. If you want to really profit and fundamentally change your financial condition for the better in the face of this disaster, then you’ll want to see exactly what I’m doing in addition to buying gold.

I share my trades, my reasoning, my timing, and my positioning. I go into Austrian economics and the nature of money, and hope to teach what most investors ignore: the nature of money itself. The End Game Investor is not just trading advice. It is a course in monetary theory and economics.

The Ultimate Goal of The End Game Investor

The purpose of The End Game Investor is to guide you through this final phase of the collapse of the monetary system – what Austrian School economist Ludwig von Mises in his magnum opus Human Action called the “crack up boom”. He wrote:

If once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum size. For under these circumstances the regular costs incurred by holding cash are increased by the losses caused by the progressive fall in purchasing power. The advantages of holding cash must be paid for by sacrifices which are deemed unreasonably burdensome. This phenomenon was, in the great European inflations of the ‘twenties, called flight into real goods (Flucht in die Sachwerte) or crack-up boom (Katastrophenhausse).

I’ve shown you the parabolic charts of the money supply. The crack-up boom is well on its way. Mises’s crack up boom and final destruction of paper currency is now happening. As loans go bad and the rot extends up to the banking sector, the expansion rate of the money supply will continue to accelerate past the stratosphere as consumer bailouts continue.

The End Game Investor is Fundamentally Different From Most Other Marketplace Services

Unlike most other Marketplace services, I do not assume that capital markets as we have known them for decades will return to their previously overvalued levels or anything close to it in real terms. Not a chance. Even if they do so nominally in paper dollar terms, it won’t mean those invested will be gaining any real wealth. Not with consumer price inflation set to explode higher at what I believe will be a record pace for the US Dollar.

The Fed does not have the situation under control, and therefore any investment strategy based on the bedrock assumption that the US dollar will continue to be the world’s primary monetary medium, will ultimately fail.

Other services that focus in on specific investment sectors or tailored strategies like dividend income let’s say, profess highly developed expertise in the areas they cover. In the vast majority of cases this is true. There are many bona fide experts in a plethora of investment fields that offer fantastic trading and investment advice within their areas of expertise.

But!

The investment advice of mainstream experts can only function well within the working assumption that the debt-based monetary system as we know it will continue to survive. I believe this assumption is fundamentally wrong. If you agree, then The End Game Investor is the service you want.

Monetary inflation, meaning the amount of new paper money in the banking system, is headed way beyond the stratosphere and into distant galaxies now. Direct financing of governments by central banks has already begun in Great Britain and it is only a matter of time before it spreads worldwide. Direct financing of governments by central banks is the move that everywhere and always has preceded hyperinflation in the past. It won’t be any different this time.

Once the mainstream recognizes the scope of the new market reality, it will already be too late to protect yourself or your family.

If you have even a passing fear that what I’m saying is true, then you owe it yourself to sign up for a free trial to The End Game Investor to see exactly what it is that I’m doing, how, and precisely why.

Let’s Put it Another Way

Perhaps I’m being hyperbolic, blinded by ideology or some such. After all I am an ideologue. I do not deny that. All human beings are blinded by their biases to a degree, myself included, but let’s do a 180 and consider this question from the opposite perspective.

What are the underlying assumptions of all those investors and associated gurus and experts, mainstream economists, asset managers and CPAs who take it for granted that the current monetary system as we know it will continue to survive in perpetuity? Let’s consider:

  1. The Federal Reserve can literally double the money supply in the space of a single year while production of real goods and services in the entire global economy has slowed significantly, all without an obvious effect on consumer prices.
  2. Negative real yields on Treasury bonds will continue indefinitely because foreign demand for US government paper is endless, even if price inflation rises.
  3. If the Fed ever does have to fight inflation, it can simply raise interest rates, even though there is a clear and present danger that this would bankrupt the federal government.

As to point three, 10% of federal outlays are already dedicated to interest payments on the national debt. And that’s with real rates in negative territory, before the COVID-19 outbreak.

The assumptions above are beyond wishful thinking. They are complete and utter fantasy. But they are taken for granted by almost everyone from sovereigns to institutional investors to hedge funds all the way down to retail investors. Why? Simply because the alternative is literally inconceivable to them. But that doesn’t mean it isn’t happening. The alternative means this:

  1. It means the US dollar will not survive this crisis as the world’s reserve currency.
  2. It means equities will collapse in real terms even if they reach new nominal highs.
  3. It means all debt-based income plays like mortgage REITs, MLPs, CLO funds and other tricks to wring yield out of a perpetually negative real interest rate environment will completely implode.

It is long past time to prepare for this inevitability. I have been preparing privately since 2008. Now I’m going public, because I need to take action and we are now almost out of time. Whatever time remains is extremely short, which is why I have launched this service. To save others who know, or at least suspect, that this is actually happening, but don’t know exactly what to do about it.

Beware Dividend Investing

I have been warning about the dangers of high-yield investment vehicles for years in many of my articles on Seeking Alpha which have been received negatively, judging by the comments section. One was New York Mortgage Trust, a high-yield distressed mortgage REIT. It has collapsed since I covered it. We won’t be making those mistakes at The End Game Investor.

Using the same investment principles I have always employed, focused primarily on monetary analysis, I was also able to successfully call the August 24, 2015 stock market crash 9 days in advance. This is the kind of real-time analysis you will get with The End Game Investor.

Am I always successful on every call? No. Nobody is. But the way I position for my calls is inherently low risk/high reward. I maintain relatively high cash positions and the capital I stake on leveraged plays is low. I buy on weakness, accumulate, and rebalance. Some of my specific calls will be off. But the ones that succeed will be grand slams. If I’m right about the fundamentals here, returns will be spectacular. If I’m wrong, losses will likely be relatively low.

The Inescapable Conundrum

The inescapable problem is that the minute consumer price inflation begins to significantly rise on the other side of the lockdowns, there will be nothing anybody in power can do about it. Not a thing. Price controls will only exacerbate shortages.

Back in the late 1970’s when the CPI inflation rate was hitting as high as 15%, then Fed Chairman Paul Volcker was able to stop it by jacking interest rates up to 20%. This time, that kind of move is entirely out of the question. Once inflation picks up, it will be absolutely impossible to stop.

The bond market will completely collapse. Equities will fall hard in gold terms, which indeed they have been doing for 20 years now.

How to Protect Yourself

Gold Bullion

The broad answer of course is gold and silver. But it’s not that simple. The answer is how. The End Game Investor focuses on low risk/high return strategies based on gold and silver and associated stocks that are designed to capitalize on a situation that resembles the gold market of the late 1970s, but even more extreme.

If we succeed, and I believe we will, then even those with relatively little to invest, will be able to protect themselves from what is coming.

There are many gold and silver ETFs, but not all of them are safe and not all of them will survive what I believe is coming. Some of them are suitable for my low risk/high return leveraged options plays, and others are more suitable for core positions to be maintained longer term.

Not all gold and silver stocks are ideal. Many are dangerous. Jurisdiction matters, as governments tend to seize capital in times of crisis. Each miner’s hedging strategy, balance sheet, assets, location, and management all matter, and I only recommend the ones most likely to see the other side of this monetary crisis.

Again, if you are curious, just sign up for the two-week free trial to see the model portfolio so you can understand what I’m doing and why. You owe yourself at least that. If you like my methods and want to participate, stay aboard. Some moves will be short term trades. Some will be small hedges against core positions. Some will be highly leveraged but small options positions. Core positions themselves will not be touched unless fundamentals change. I don’t expect that to happen any time soon.

As a subscriber, you will also learn the basics of Austrian School analysis of the credit cycle, which is now quickly approaching the final crack up boom Mises warned about over 70 years ago.

The End Game Investor is as much discussion and elucidation of monetary theory as it is investment and trading strategy. 

By subscribing to The End Game Investor, it is perhaps not an exaggeration to say you are ensuring you and your family’s financial survival. And I can also reliably say my posts and analysis will be captivating, original, in-depth, and dare I say wry and witty.  

Gold is Money, Bitcoin Isn’t


I am not an investment adviser. Make your own decisions. I like the rational and even biblical approach Rafi takes. It makes a lot of sense to me. You decide yourself.

Comments welcome below.

Join me on Telegram.org: @GideonHartnett https://t.me/gideonhartnett 

If you want to be notified by email each time I add a new post click the “Email” button below and add your email address.

By John Gideon Hartnett

Dr John G. Hartnett is an Australian physicist and cosmologist, and a Christian with a biblical creationist worldview. He received a B.Sc. (Hons) and Ph.D. (with distinction) in Physics from The University of Western Australia, W.A., Australia. He was an Australian Research Council (ARC) Discovery Outstanding Researcher Award (DORA) fellow at the University of Adelaide, with rank of Associate Professor. Now he is retired. He has published more than 200 papers in scientific journals, book chapters and conference proceedings.

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