Dear Reader,
The Federal Reserve voted 12 to 0 yesterday.
First rate hike in over three years. To 3.75%. They are calling it a victory over inflation. The press conference was full of confidence.
Gold is at $4,328 an ounce. Gold has its own press conference. It runs 24 hours a day. And right now it is saying something the Fed is not.
Inside today's issue:
- The 12-0 Vote: The FOMC hiked rates for the first time since July 2023. The same committee that said inflation was "transitory" in 2021 is now calling 3.4% CPI "elevated." They are chasing a problem they created.
- The Math They Skip: 4% interest rates on $36 trillion in national debt. Every quarter-point hike costs billions more in interest payments. The people who run the dollar cannot afford to actually fight inflation.
- What Gold Knows: Silver closed at $64.60 yesterday. Gold at $4,328. Since 1971, gold is up over 12,000%. That is not a trade. That is 50 years of dollar debasement in a single number.
- Larry Benedict — Oil Skimming: Larry Benedict just released a new presentation on a strategy called "Oil Skimming." It's worth a look. (Brownstone Research)
THE WAKE-UP CALL
Here is what happened yesterday at 2:00 PM Eastern time.
The Federal Open Market Committee voted unanimously. 12 to 0. They raised the federal funds rate by a quarter point, bringing it to 3.75% to 4.00%. The first rate hike in over three years.
Chairman Kevin Warsh held a press conference. He spoke of vigilance.
Meanwhile, core PCE is running at 2.4%. CPI is at 3.4%. The target is 2%.
They are not close.
"Inflation remains elevated. The committee is strongly committed to returning inflation to its 2 percent objective."
I want you to read that sentence twice. "Inflation remains elevated." That is the same Fed that held rates at zero when inflation was 9%. The same Fed that called it "transitory" in 2021. The same Fed that cut rates in 2024, then had to hike again in 2026.
They are never early. They are always late. And when they finally move, they tell you it's a victory.
THE REAL MATH
Here is the number they do not put in the press release.
The United States owes $36 trillion. Interest payments on that debt are now bigger than the entire defense budget. Every 25 basis point hike adds billions in annual interest costs.
Think about what that means. The people managing the dollar cannot actually fight inflation. If they raise rates enough to kill it, they break the government's ability to pay its own bills. So they hike just enough to look serious. Then the dot plot already shows cuts coming again in 2027.
Hike today. Cut tomorrow. Repeat until the dollar is worth nothing.
GOLD ALREADY VOTED
In 1971, Richard Nixon closed the gold window. An ounce of gold cost $35.
Yesterday it closed at $4,328.
That is not a "gold rally." That is what 55 years of committee-managed currency looks like, priced in honest money.
Silver is at $64.60. I bought my first silver in 1965 for less than $2 an ounce. The metal did not change. The dollar did.
I have been saying this for 30 years. Savers are losers. Not because saving is wrong. Because what you are saving in is being diluted by the same people who just voted 12 to 0.
Before I tell you where the cycle points next, and what history says happens every single time a government tries to inflate its way out of a debt trap...
SPONSORED: PORTER & CO
THE PLAY
Here is what history says.
Every great empire in history has tried this. Rome debased the denarius. Weimar printed marks. Every time, the government told its citizens the currency was sound.
Every time, the people who held real assets survived. The people who held paper lost everything.
The Fed just hiked rates in a country that cannot afford to keep them high. The dot plot already reveals the exit plan. They will hike until something breaks. Then they will cut. Then they will call it stimulus.
Gold will not go down because of a 25 basis point move. Gold knows the game. It has been watching for 5,000 years.
MY RICH DAD SAID: "Savers are losers and debtors are winners, when debt is in a currency the government controls." The Fed just confirmed it with a unanimous vote.
You know what to do. Gold. Silver. Real assets. The B and I quadrant. Not because it is exciting. Because the alternative is trusting a committee.
To your freedom,
Robert Kiyosaki
Author, Rich Dad Poor Dad
P.S. A new briefing from Larry Benedict: "Oil Skimming: a Better Way to Play Oil." Click here to see Larry Benedict's Oil Skimming presentation.