Here Comes The Massive Price Inflation (From The Comfort Of Your Living Room)

SD Outlook: Remember the whole “paid to sit at home and do nothing” meme? It’s starting, and it’s starting in earnest…

The government is going to throw a crapton of money at this problem, and the government’s really only getting started.

For example, we’ve seen the $3000 stimulus checks sent to families, we’ve bailed anybody and everybody out on Wall Street who’s buddy-buddy with the Fed and its market riggers, we’re on the second round of “small” business relief, and that’s not all.

That’s right.

There’s more!

You see, May 1st is quickly approaching, and for all intents and purposes, May, at some point, is when the whole “paid to sit at home and do nothing” begins.

And when I say get paid to sit at home and do nothing, I mean that literally, but I also mean paid to sit at home and shop.

Because why the heck not?

I mean, has anybody else done home delivery of groceries?

It’s the bomb, really, and I honestly don’t know how the stores are making any money at it – oh yeah, consumers will ultimately be footing that bill – but fresh veggies, meat and cheese are just a few clicks away, delivered in just a day or two, and you don’t even have to interact with the delivery person.

Therefore, people technically don’t even need to “waste” time again going to grocery stores, unless, of course, you’re looking for a 30-pack of PBR and some pseudoephedrine because then you gotta go to the actual store.

But I digress.

The month of May, in my opinion, is when the CARES Act and its free-money-to-the-people really starts cranking out the cash, firing on all cylinders.

And what does that mean?

Oh, it means Unemployment Insurance is supplemented with Pandemic Unemployment Assistance (PUA), Pandemic Emergency Unemployment Compensation (PEUC), Federal Pandemic Unemployment Compensation, (FPUC), and all of the wonderful things that only the very best of Federal acronyms could provide, which one can learn about, in general, at this Department of Labor website.

The program, however, is run through the various states, so people will need to check with their own state for more specific information.

Here’s the bottom line: Remember back in March, or was it February now, when Steve Mnuchin said “we’re going to make sure that people still get their paychecks” if they’ve lost work because, for example, their kids schools shut down?

Well, that’s starting very soon, and it’s also going to be retroactive, at least in the state where I live, and it’s minimal effort to apply, with nearly everything being done online.

Here’s the question: How in the heck are they going to verify millions upon millions of claimants all applying at the same time under the new provisions of the CARES Act?

Of course, some states may not even require additional claiming to reap the added Federal benefits.

And what are some of those benefits?

Oh, things such as the extra 13 weeks of extended unemployment, plus the extra $600 cash payment per week, and more.

In other words, people can be paid, via weekly direct deposit, to sit at home, with the groceries coming in, and with tons of free time on their hands.

Believe me when I say that Americans might not the the smartest bunch of sheeple out there, but they’ll dang sure figure out how to get a piece of this free money action!

Aside from nobody wanting to go back to work, this means there will be more and more money literally pumped into Main Street, but it will all be chasing around fewer and fewer goods.

This is going to be one giant online shopping spree because, hey, the cell phone company said they’re not cutting off anybody’s service, the landlord can’t throw you out, and they won’t cut your water off if you don’t pay your bill!

Those are all examples, but the point is the same: All of the money the Federal government is throwing at the pandemic is creating serious moral hazard to no end.

To try and make the point I’m making make sense, because, well, I feel like I’m not making very much sense this morning, let me show the mainstream narrative followed by the fast evolving reality.

Here’s some of the mainstream narrative:

  • People are ready and even eager to go back to work.
  • Food is expensive for newly, abruptly out of work people, leading to modern day vehicular bread lines.
  • People won’t have money to spend on consumer goods because they’re out of work.

Here’s some of the fast evolving reality:

  • With the CARES Act really starting to kick-in, people will literally be able to take the ENTIRE year off, and that’s assuming the government doesn’t extend this emergency relief even further into the future.
  • With money coming in, extra even, on a weekly basis, and with the major players polishing local, home delivery service of grocery items, etc, instead of the people going out for “assistance”, the “assistance” will be delivered directly to the front door, with the ice cream still frozen, the bananas only slightly under-ripe, and the Cheese Doodles extra fresh.
  • People will have extra money to spend online, especially if “relief” programs help-out with utility bills, and especially if they’re spending less money overall on gasoline, both because the price has dropped and because they’re driving less, so frivolous items bought on a whim will be forgone in-store, but will pick-up in earnest online.

The bottom line is that nobody is going to want to go back to work for the rest of the year, everybody is going to figure out a way to get whatever free money they can, and all of that free money is going to be competing for a shrinking supply of goods, mostly bought online and possibly bought online and picked-up locally to avoid high shipping costs.

At least that’s how I can see the rest of the year playing out.

And if people aren’t going out to NBA games, the movies, and other places like that where a whole lot of disposable money can get spent rather quickly, then that money will just be used to buy something real because rising prices beget rising prices.

I think the beginnings of this have already started, and I think that as we move through May, this will kick-up in full force.

People in the US are lucky, because here we have the World Reserve Currency, plenty of goods to start with that have been overflowing the store shelves for years, and still, relatively cheap and plentiful food.

That is a combination for major price inflation as the online spending spree, in my opinion, will happen alongside of the food price inflation, which will only cause the government to throw more money at the problem.

See how this works?

We’ve been talking about 113 on the gold-to-silver ratio for the past month or so:

Is this the week silver finally begins to outperform gold?

Side note: If it is generally understood that gold leads silver, and silver leads the miners, what are we to make of the moves in the miners that everybody’s so bullish about?

To me, that means’ silver’s lag is extra artificial, which means the move to the upside will be swift if not downright face ripping.

For now, the cartel’s done a nice job of keeping silver under its 50-day moving average:

Sure, it’s an ugly peg, but the cartel lost its groove long ago.

It’s truly amazing how different gold’s chart looks when compared to silver’s chart:

Either gold’s wrong, or silver’s wrong, and I don’t think it’s gold.

Which is another reason I think the price of silver’s set to finally begin moving.

I, for one, would not be surprised if we are talking about $20 silver by the end of the week.

Palladium’s price is just a couple hundred bucks north of gold’s price:

When the two reach parity again, we can finally see if palladium catches that flight-to-safety bid alongside of gold.

In my opinion, all four precious metals will catch the flight to safety bid.

Which means platinum, still, for deeper-pocketed investors, looks like a nice value here:

I think the break-outs could come this very week.

Speaking of this week, first quarter GDP is released on Wednesday, so get ready for ‘the most widely anticipated GDP report of all time”.

Copper still refuses to buckle and crash:

Which tells me the commodities, in general, are bottoming right now.

Copper is perhaps pulling out of the bottom first.

Crude oil, however, continues to have one heck of a time:

Of course, if I have something to sell, but nobody wants it, what will the price be?

The price will be zero!

Or, in the case of our 24/7 rigged markets, it could be negative forty bucks, but I personally don’t play in Financial Fantasyland, and I wouldn’t recommend it either.

But to each his own.

The VIX looks like it’s still being walked back down:

It does fit in well with the air of optimism, does it not?

The tech heavy Nasdaq sure has been on a tear:

At a time when the Xbox 5 is surely going to cause sticker shock, and at a time when we’ve either reached peak cellphone, or peak cellphone saturation, it will be interesting to see the delicate dance between the fundamentals and the sheer brute force reality of rigging the markets.

Yield on the 10-Year Note is where it’s been for a while:

I still think the pressure is to the downside, however, with more downside coming, until the bond market blows-up, of course.

It sure is nice to be a holder of dollars here:

Just because it’s the hyperinflationary death spiral of what was once sound money doesn’t mean it doesn’t have to be fun.

Besides, the dollar is still relatively strong, so holders of dollars will get more bang for their buck.

At least, more bang for their buck initially, before durable goods disappear from the stores.

Bottom line as we find ourselves here this beautiful Monday in late April?

It takes a while because, hey, it is the government we’re talking about.

But the throwing of massive money at the problem has begun.

The paid-to-stay-home-and-do-nothing is now starting.

It’s stagflation in one sense, but it’s being masked.

Stagnant wages will only be clear next year.

For this year, it’s on Uncle Sam’s dime.

And it’s going to be a fun year.

With an extra allowance.

It’s paid out weekly.

Direct deposit.

Money!

It’s a?

Hit.

Stack accordingly…

– Half Dollar


 

About the Author

U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.

Paul’s free book Gold & Silver 2.0: Tales from the Crypto can be found in the usual places like Amazon, Apple iBooks & Google Play, or online at PaulEberhart.com. Paul’s Twitter is @Paul_Eberhart.

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