Tariffs Off The Cuff
I’m not an economist, not even good with stock trading. I do tend towards the Austrian school of thought but I don’t recall why because it was long ago when I studied such things, was too bored with it to delve deeper, and have not looked into the details in a very long time.
But I notice people blaming Trump’s tariffs for the market collapse of the past few days. Trillions of electronic dollars have been lost since Thursday; people forgetting those electronic dollars were pumped into the system since roughly Oct ’23. Stock prices went up because it took more devalued dollars to buy something of more or less constant value. Gold was $35/oz when I got out of high school; a silver quarter was worth 25¢. That quarter is now worth $5.60 just in melt value. That quarter isn’t worth more, this dollar is worth less.
The crash was coming; Trump’s tariffs simply pushed the already shaky structure over. Sometimes it’s best to tear the bandages off a festering wound of our economic “system”, scrape the dead flesh away, then clean and re-bandage the wound … or set it free to clean air to heal.
I don’t think anyone not “on the inside” truly expected to find the rot as extensive and deep as it apparently is.
You don’t really think that 401K is yours, do you? It’s like “owning” your house; you own it until the bank or government wants it back.
You do know that when you give “money” to a bank, it becomes the bank’s property, don’t you? In return, they give you what in effect is an IOU.
Whether Trump’s plan works or not is far too soon to tell – he hasn’t been in office 3 months yet and still has to work with the Biden budget set before the election until the end of the current fiscal year Oct 1.
The government’s timing of things has gotten really off-kilter: President elected in Nov, doesn’t take office until January, and stuck with a budget set the October before the election; it’s 9 months into the administration before the President has full control (within what Congress allows) of his policies. Makes daylight savings time seem logical.
Personally – having seen “outsourcing” since the 80s – I think tariffs are a potentially good way to turn us back into a producer nation rather than a consumer/welfare state. Next, get rid of so many cockamamie tax laws and regulations that make it cheaper to produce overseas.
As I’ve seen it said, the only ones not receiving benefits from taxpayer’s money are the taxpayers.
I don’t think its time to “buy the dip” just yet – it wouldn’t surprise me to see the S&P500 down to 4000 or lower – recall it was 3800 when Biden took office and had dipped to 4100 in Oct 23 when the Fed announced it was dumping $10T into the market. It peaked around 6200 – almost a 40% increase in numbers on a computer system somewhere. Need to flush that excess funny-money out of the system. Best do it now rather than let it fester into incurable gangrene.
Assuming it hasn’t gotten that far already.
Of course, now that I’ve spread my words of doom and gloom, the market will start going back up and the world will become full of unicorn farts and rainbows. Quoting part of QTR’s disclaimer, “This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money.”
Don’t feel bad. Even fancy economists at Goldman Sachs can’t get it right.
LOL
I’m a fairly simple person, and always have been. Especially concerning all things wealth. I don’t like banks for a variety of reasons but most notably for that “fractional reserve” thing. Someone that knows about such things told me that if you put $100k in a regular street bank and go back a month later to take $90k out they won’t have that much cash on hand.
Say what? How is that legal? Well, it is. Live and learn and become stronger for it. Don’t put more in the bank than you are willing to lose.
For the majority of my adult life I never had much in the bank. I bought houses instead. One at a time. When my bank account would get to about $10k I’d pull most of it and pay it on our house. Over and over, for 40 years. Finally, in about a month, I will realize the benefit of my endeavor with our current house being paid off.
True, I could have spent my money over that 40 years more wisely and made much more in return, but the risk factor was always there and therefore my comfort zone would be compromised. Fortunately, all along, I lived in an area where a decent home would sell in as little as a few days, if I ever got into a major financial bind and needed long coin, fast. That never happened though.
In the past few years I got interested in what’s called “junk silver”. I don’t like that term and never use it. I read some stuff, watched some vids, then perused about 20 places online that sell silver. I settled on http://www.jmbullion.com primarily because they have free shipping on purchases over $200 and silver is heavy stuff so the shipping can add up.
Little by little, buying in $200 to $300 chunks I have accumulated about $10k in old 90% silver US coins – dimes, quarters, halves, dollars. Here’s my thinking, a 90% silver dime costs roughly $3. even though the “face value” is only 10 cents. A silver dollar is 10x the value of a dime so it is worth roughly $30 and has a face value of $1. In the future, if the bottom falls out and FRN’s (federal reserve notes – or dollars) become worthless I will make needed purchases with my silver coins. At that point in time it is unlikely I will ever make large purchases of say, $100 or more. Most purchases will be on the order of say, loaves of bread, or meat or veg’s, etc., therefore small denomination silver coins will work well for that stuff. Ex.: 1 loaf of bread for 1 dime which is worth about $3. capiche?
I didn’t go the same route in gold because the numbers are skewed heavily against my idea. A small silver dime is worth about $3 but do you know what a gold coin the same size as a dime is worth? Hundreds of dollars. I wouldn’t be able to buy a loaf of bread with a gold coin the size of a dime, I’d have to buy hundreds and what am I going to do with them?
Another thing to consider is the recognizability of 90% silver US coins. Everybody knows what they look like and because the value of the denominations is so small there is little likelihood of anyone counterfeiting them. None the less, I read some stuff and watched some vids on assaying and I bought all the equipment to test and value silver, gold, copper and platinum. Loops, scales, chemicals, charts, etc.
Maybe in the future I’ll become a black market banker…LOL
Can someone tell me exactly what a bank can do with your mortgage and when? Can they shut your mortgage down if you protest the water company? Can they shut your mortgage down because a federal agency wants to use your house? Can they shut your mortgage down when the country goes bankrupt as in 1929? Under what conditions can the bank shut down your mortgage and require instant payment in full?
For your own good you need to read, and understand, that giant load of paperwork you signed when you bought the crib, or pay a lawyer to explain all of it to you.
Generic people like me can only offer generic information.
No, I didn’t read all that stuff, but would if I had some sort of warning.
Thanks Ghost– My apologies I should not have been so general when my real concern is about what action could happen in DC or New York that would require the banks to close down mortgages in general–war?a stock market crash? Is there some Federal event that would generate a close down on mortgages?
I didn’t look deep into my fine print either – who does and what difference would it make? – but I suspect there’s some clause in there that legalizes calling in your note. If for whatever reason that was done, could you pay off your mortgage in 30 days? If they give you that long? Or the government declares eminent domain? Or someone declares you a “domestic terrorist”? Or your friendly neighbors down the street that work for your local city council decide to jack up your property taxes beyond what you can afford?
Or think of Americans of Japanese descent in 1942.
All very unlikely events … so is getting struck by lightning … but the probability is not zero.
No need to waste time worrying about it though.
I don’t have any more than a couple of coins here and there, but over the years, the idea of it has had an appeal to me. Years ago, I flew with a guy who was fully convinced on junk silver. No 401k, IRA and not much in his bank accounts. He and a partner were saving up and periodically buying junk silver $4000-5000 at a time. This guy had 40 acres where he farmed goats, and he had his silver buried all over the place. When he received a recent purchase, he would seal it into PVC pipes and then find a place on his farm to stash it. He kept maps of these stashes at each set of in-laws houses (never at his own house) and made sure to never bring his phone along when he was planting his silver. I told him that he should make a habit of going the other way….hang his phone around the neck of a goat and let the goat roam where it will.
I get the argument that the value of a $1 gold coin will make it less-than-useful if and when the dollar collapses, but I’m anticipating it differently. If the dollar collapses, there will be something that will replace it in fairly short order. Maybe it’ll be as simple as an arcade coin. For as much as I will need to buy something at the grocery store, the grocer will need to have a buyer for the items in his store. Cigarettes have long been used as a medium of exchange but the recent move in prisons is to use Ramen noodles as currency.
The biggest part of our wealth is split between the capable hands of our financial planner and the home that we own. I have 2 relatively small accounts that I can claim some success with, but only if you define “success” as “not losing every penny”. One is a ladder that I’ve built of Treasury Bills and the other is a very small account that I manage myself. In that small account, I recently closed positions in SLV and CPER (silver and copper ETFs) for about 5-7% gains over 6 months or so. I also bought a very small position in GLD (a gold ETF) back when it was at then all-time highs. My thinking was that it was high enough that it ought to correct, but wasn’t showing signs that it was about to. I should have put in more…..I’m up about 15% today. [I won’t speak of the losers that I’m carrying in this account, for which I am still struggling to find an exit.]
Today’s news has much that I only barely understand….tariffs, trade, the Markets (equity and bonds), on, and on, and on. But if you want to understand money, currency, reserve banking and the Federal Reserve, a good place to start is The Creature From Jekyll Island. Highly recommended. Yes–$35 for a paperback is a bit pricey (it is not available as an e-book…I suspect that there’s a reason for that), but it is well worth your investment. After I read it the first time, I bought copies for my brother and each of my children.
Paraphrasing Henry Ford: “If the public truly understood the banking system, there’d be a revolt”.
I’m also in favor of US silver coins though I stick with dimes and quarters; halves and dollars are too uncommon. I don’t go crazy about it though. (I do recall the silver clink of Eisenhower dollars in the casinos of Las Vegas back when. Wish I had saved some but the post-1964 coins were only 40% silver.) “Dollars” – however “fake” – will either be around (I suspect a new currency coming soon that has a couple of zeroes chopped off – the $100 bill is the new $1 bill) or it won’t really matter; the nation will be under someone else’s control should that occur.
I don’t trust bitcoin or other electronic currency – I don’t fully trust anything that depends on software.
I don’t bother with gold, it wouldn’t be useful for much beyond bribes and such – and if the nation got to that point? Well, I’m too old to mess with those consequences anyway. I’d be the guy that stays behind with the machine gun and grenades to let the healthier ones get away.
I don’t believe the market is done falling. Yesterday’s ride up was an opportunity to get out. As an example, I got out of one trade for a loss of $500. If I had waited until today, that loss would have been $8000. Another down day like Monday, that account would be wiped out.
“Creature” is an enlightening book. Educational, informative … helps you realize how powerless you are and how rigged the system is. Note that DOGE is only dealing with small amounts – a billion is small in today’s world and I see mostly millions here and there. I didn’t notice any reduction taxes this year as a result of all the savings. That money will just be re-directed.
In theory, tariffs should bring back US manufacturing; an increase in employment, a decrease in welfare benefits … an increase in tax revenues, more funds for the government to squander. Trump won’t be around forever even if this term is “successful”.
I like that idea of hanging the phone from a goat.
“…I don’t trust bitcoin or other electronic currency – I don’t fully trust anything that depends on software….”
Me neither. Not only do I mistrust placing my wealth onto the internet, but I would never trust any alt.coin which has a CEO.
Why is it the crazy people always have the most money and do the craziest stuff with it? (the dood burying all that silver)
My understanding about gold is that coins can only be made so small (in denomination) because of the physical size limitation. At $3k and ounce, a $10 gold coin would be very small, or it would have to be cut with something else, which then gets into the zone of questionability. For large purchases? Gold’s your uncle.
That book (creature). It’s out there in pdf format but you have to look for it. I have it but have still not read it.
FWIW, all of my hand power tools (circular saw, router, etc.) are housed in large 26″ Plano tool boxes along with all of the accessories for them. They all sit side by side (maybe 30 of them total) on a wall of shelves in the workshop. One of them Plano’s has all my silver stuff in it, along with about $12k in FRN’s. All the Plano’s have labels on them and the silver one has a label that says “Insecticides & Poisons” and my wife knows about it. Can you imagine the wife of the guy you cited out there digging around in the dirt after he dies? She’ll be cursing him the whole time….lol
BTW, the problem with cigs and noodles is they go stale pretty quick, maybe 6 months or less – same with beer.
Gold is available by the gram. At today’s price a gram will set you back a bit over $100.
Here’s another possibility for gold.
That link looks bad. Let’s try this one…. Gold Multigrams…
https://www.pamp.com/product/minted-ingots/fortuna-gold-minted-bar-multigram25
Yes, I’m aware of the different denominations and types. The problem is validation. How do YOU know what you have bought is real? Further, if you try to sell it how does the buyer know it is real?
My reason for silver 90% US coins is the recognizability of it. Everybody knows what dimes – silver dollars look like.
Every form of currency has it’s pro’s and con’s.
Precious metals: Pro’s: There is a finite amount of the stuff, so you don’t reasonably have to worry about inflation. Con’s: To store any degree of wealth, it becomes pretty heavy and unwieldy. It is suseptible to counterfeiting. Securing it is an issue.
There is a wide range of PMs. As discussed, you could go with the Junk Silver. You could go with the gold or silver coins minted by governments. Or, you could go with the PMs put out by independent producers. If you’re worried about a counterfeit, you shouldn’t limit your concern to other than government-produced PMs. This morning I ran across a story about an outfit selling Silver Eagles on Walmart.com which turned out to be fakes.
Commodities: Pro’s: Everybody needs them. Cigarettes, noodles, beer, potatoes, whatever. I’ve still got that giant horde of Covid toilet paper stuffed away in a back closet. If it all fell apart tomorrow, do you think that I couldn’t turn a roll of TP into a needed good or service?
Cons: Some of them have a problem with remaining fresh enough to use.
IMO, there’s no one perfect solution, so I’m in the All-of-the-Above camp. I too have a stash of “walking around cash”. I’ve got some of my wealth in PMs (to include lead). I reload, and have enough components to last my lifetime. I’ve got a full panty, and a full freezer and some long-term food waiting for TEOTWAWKI.
You and I would make pretty good neighbors AZ.
We don’t need each other.
But we’d be there if we did. lol
Ok. Please explain: TEOTWAWKI !
That’s an old one
The
End
Of
The
World
As
We
Know
It
“a full panty”…sounds messy. (sorry. couldn’t resist.)
Have six months of food and water on the shelf.
Good advice. Posting this.