On The Constancy Of Cumulative Purchasing Power

Financial crises do not erase purchasing power. They only shift it. How extreme a financial crisis is, is a reflection of how extreme that shift is.

Summary

• Purchasing power in the world expands as people build things and contracts if things get destroyed. Financial crises do not erase purchasing power, but only shift it.

• Gold open interest is approaching 400K, which it almost never goes below.

• $5.13T in short term debt is due in the next 6 months. A lot of it must be rolled into notes, and that will lock in high interest rates.

• Platinum group metals are acting really weird.

• $1 trillion level in shadow banking loans just hit. Like forcing poor people to borrow from loan sharks instead of banks, bad idea.

With the S&P at 5,000 and gold stocks in the toilet, it's time to remind ourselves what this is all about.

There is a certain amount of purchasing power in the world. It expands as people build things. It contracts if things get destroyed. Generally, it expands, short of nuclear war or an alien invasion.

Right now that purchasing power is spread out across a bunch of paper/digital assets and real assets. Purchasing power does not get erased in a financial crisis. It only gets shifted. Cumulative purchasing power increases or decreases in proportion to the amount of real stuff in the world. Financial crises have no direct effect on this, no matter how extreme they are.

How extreme or powerful a financial crisis is, only has to do with how big and terrible the shift in purchasing power is. How big the illusion is that has to be corrected.

All the people with huge gains in their stock portfolios or bitcoin or whatever it is they think they own, is purchasing power right now through inflation, true, for an individual who say locks it all in tomorrow by buying real assets. But it is not possible for all these people to lock in their purchasing power together. So most of them do not actually have it.

The other side of their illusion, namely that they have XYZ purchasing power, is the illusion we are currently suffering through, namely that our purchasing power seems much lower than it actually is. As their positive illusion falls apart, our negative illusion also falls apart. We all come back to reality together.

In the end, when the inflation collapses, all the purchasing power everyone thinks they have now, gets poured into the bottom of the pyramid from the top. The bottom of the pyramid is the most liquid commodities of course, as we know. So the stackers end up with all the cumulative gains everyone stacking paper and digital assets, currently thinks they own.

Think of it this way. In the End Game, all the gains that everyone is now enjoying in their heads, will all be funneled to the stackers after the final crisis takes its course, but not just in our heads. So even though we are not experiencing these gains right now, all their gains actually belong to us, as long as we make it to the End Game intact. They just don't know it yet.

As long as you know this, and understand the inexorable logic of it, then you can't get sidetracked by fear of missing out or jealousy, knowing that it's all coming to us anyway.

On that note…

Gold Open Interest Approaching 400,000