Dear Reader,
THEY LOST 23,000 JOBS IN JULY. Inflation is still running at 3.5%. Your wages grew 3.2%. Do the math. You are losing.
Washington calls this a soft landing. I call it what it is.
Inside today's issue:
- The Government's Numbers. They reported job losses and celebrated. Here is what they are not measuring.
- The 1970s Playbook. Stagflation has a name. It has a history. And it has a very clear winner.
- The Debasement Trade. Gold is near $4,600. Silver is up 77% in a year. Wall Street finally has a name for what I have been saying for decades.
- A new briefing from Larry Benedict: "Oil Skimming: a Better Way to Play Oil."
CBS News ran the headline on August 7th. "The U.S. economy unexpectedly shed 23,000 jobs in July, undershooting economists' expectations."
Then NBC called the Treasury Secretary. He said the K-shaped economy is dead. Everything is fine. Move along.
Here is what they are not telling you.
WAGES GREW 3.2% OVER THE LAST YEAR. Inflation is running at 3.5%. That gap is called a pay cut. Not a soft landing.
The labor force participation rate hit 61.4% in July. Down 0.7 points since January. That means fewer people even looking for work. The unemployment rate only looks stable because people quit the game.
"Wages are struggling to keep pace."
I have seen this movie. I saw it in the 1970s when Nixon closed the gold window, oil prices spiked, and inflation ate through the savings of an entire generation. Unemployment went up. Prices went up. The government called it a transition.
This is not a transition. This is stagflation. High inflation. Weak jobs. A central bank that cannot move.
The Fed cannot cut rates. Inflation will explode. It cannot raise rates. The jobs market will crater. It is trapped. Kevin Warsh flies to Jackson Hole this week to speak for the first time as Fed Chair. Wall Street is watching. I am watching gold.
Because something else is happening. Something Wall Street just gave a name to.
But first — our friend Porter Stansberry has been tracking something that connects directly to this story. Take a look:
SPONSORED: PORTER & CO
They are calling it the "debasement trade."
Citi put it plainly this week: "Expressions of debasement fears are a weaker USD and long gold."
"Markets are saying something. The weaker dollar, lower Treasury prices and strengthening hard assets are all part of the debasement trade."
Gold hit $4,624 per ounce this week. Silver is at $68 per ounce. That is up 77% from one year ago. The Treasury is buying back long-term bonds to suppress yields. The dollar index is drifting toward 98.7.
Wall Street finally has a name for what I have been saying for 40 years. When governments spend beyond their means and their currency loses value, the money flows to hard assets. Gold. Silver. Real estate. Businesses that produce real things.
MY POOR DAD BELIEVED IN THE PAYCHECK. My rich dad believed in assets. When wages trail inflation, the paycheck crowd falls behind. Always. Every time. This is not theory. This is history, repeating itself at 3.5% a year.
The government will not save you from this. The Fed cannot save you from this. But you can save yourself. The exit ramp is the same one it has always been: Get out of paper. Get into assets that cannot be printed.
Pigs get fat. Hogs get slaughtered. Do not wait for permission to protect what you have built.
To your freedom,
Robert Kiyosaki
Author, Rich Dad Poor Dad
P.S. The book Hedge Fund Market Wizards profiles some of the greatest traders alive. And our friend Larry Benedict has his own chapter. Now this former hedge fund manager is turning to oil, and he says the market conditions forming right now are some of the best he's seen in 40 years. Watch the free presentation here.