Dear Reader,
Gold dropped $163 yesterday. In a single session. The mainstream called it "inflation fears." They were half right. The full story is worse than what they printed.
Inside today's issue:
- The Fed's Own Confession: The dot plot says inflation won't reach 2% until 2029. Three more years of losing purchasing power while they call it "progress."
- The 10-Year at 5%: Bond yields just hit levels not seen since 2007. That is not a recovery signal. That is a distress signal dressed in a suit.
- $40 Trillion in Debt: The national debt crossed $40 trillion in August. The fiscal year deficit is tracking toward $1.8 trillion. Rate hikes don't fix that. They make it more expensive.
- Larry Benedict: Oil Skimming: Larry Benedict just released a new presentation on a strategy called "Oil Skimming." It's worth a look. (Brownstone Research)
Here is what the Federal Reserve told you last week: they hiked rates 25 basis points. Funds rate now sits at 3.75% to 4%. First hike since 2023. Chairman Warsh called it a "commitment" to the 2% inflation target.
Here is what the Federal Reserve told you if you read the footnotes: they do not expect to hit that 2% target until 2029.
Three years. That is the honest timeline. Not this year. Not next year. 2029.
Meanwhile, core PCE is running at 3.4%. Headline at 3.7%. Oil is above $100 a barrel because Trump rejected Iran's offer to reopen Hormuz. Every gallon of gas you buy, every utility bill you pay, every grocery run you take is a tax this government is collecting on your savings.
"We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed. Today, the FOMC decided that standard has not been satisfied."
Translation: We have been hiking, cutting, holding, and hiking again for four years. And inflation is still winning.
The 10-year Treasury yield touched 5% last week. That is a number not seen since 2007. In 2007, the housing market was about to collapse. Smart people looked at 5% yields and called it stability. We know how that ended.
The national debt crossed $40 trillion in August. The fiscal year deficit is tracking toward $1.8 trillion. When you raise rates on $40 trillion in debt, you do not fight inflation. You just raise the interest bill. The government pays more to borrow. That money comes from you.
I have been watching central bank theater since the 1970s. Volcker had to take rates to 20% to actually break inflation. TWENTY percent. And it still took years and a brutal recession. What do you think 4% is going to do?
Yesterday, gold dropped $163 an ounce because hot money fled to catch bond yield. That is not a fundamental shift. That is a trade. Gold at $4,121 is not gold getting weak. It is gold going on sale.
There is a number buried in last week's Fed projections that nobody on CNBC mentioned. It is the number that tells you exactly where this ends. And it is not where they want you looking.
The number is this: the Fed's own dot plot projects inflation does not hit 2% until 2029. That means three more years of 3-4% inflation eating your savings, your wages, your fixed income. Three more years of the same theater.
What does that mean for people who want to stay free?
It means paper promises are not going to save you. A savings account at 4% does not beat 3.7% inflation. It barely keeps up. And when the next cut comes, as it always does, that 4% drops and inflation does not.
My poor dad believed in savings accounts. He believed in job security. He believed the government was handling it. He died without enough.
My rich dad bought things the government cannot inflate away. Gold. Silver. Real estate. Businesses. Assets that produce cash, not promises.
Gold is on sale this week. The Fed just told you it will not fix inflation for three years. You do the math.
To your freedom,
Robert Kiyosaki
Author, Rich Dad Poor Dad
P.S. I wrote to you yesterday about a public filing that shows where Washington's own money is going. A lot of you read it. Fewer of you watched.
So let me put the deadline in plainer terms. Washington has to act tomorrow. Thursday morning, a company almost nobody has heard of may be in the news with its stock already repriced, and every investor reading that story will be buying from the insiders who read the filing. You have one day left to be in the second group instead of the first. The briefing takes less time than lunch and names one defense stock free. Read the filing before it's a headline.