In this most recent MAMINAR, Egon von Greyerz exchanges pertinent thoughts on the economy and markets with Matterhorn Asset Management advisors, Ronni Stoeferle and Grant Williams. This timely discussion covers an extraordinary range of topics, beginning with the obvious disconnect between rising securities markets and the greatest economic downturn since the Great Depression.

Ronni and Egon address the exponential functions of rising global money supplies coupled with decades of extreme credit expansion as dual (and undeniable) tailwinds for risk assets. Since the Federal Reserve’s birth in 1913, it took 80 years to produce its first trillion dollars. In 2020, the Fed created a similar level of trillion-dollar liquidity in 5 months.

Grant reminds that central banks like the Fed are essentially new branches of government and that a powerful combination of central bank currency creation and extreme fiscal policies (i.e. deficit-spending) have been a clear liquidity boon for the favored stock markets. He warns, however, how the vast majority of election-focused politicians have conveniently confused the Fed-supported stock market with the collapsing economy, a tempting yet dangerous mistake. The media’s equal obsession with managing the “optics” of a rising stock market despite economic disaster signs all around us is of equal and telling concern.

The discussion turns as well to the critical topic of deflation and inflation, both as to price and money supply. Despite four decades of clear deflationary policies and conditions, the rise of MMT and increasing levels of government-guaranteed loans could serve as inflationary triggers.

Further, the increasing popularity of TIP’s, Ag land, precious metals and other inflation-sensitive assets suggests that investors are preparing for inflation.

History (and Egon) confirm that inflation is ultimately a matter of extreme money supply, and all agree that the backdrop for precious metals is highly favorable, not because gold is getting “stronger” but simply because every fiat currency in the world is getting blatantly weaker under unlimited QE and other central bank policy over-reaches.

The conversation turns as well to silver investing, mining stocks and the future of digital currencies as the global economy marches toward an inevitable debt and currency “re-set.”