“Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility,” wrote the Austrian founder of psychoanalysis Sigmund Freud.
Being a strong supporter of free markets and a protagonist of the capitalistic system, Feud’s observation should cause me great discomfort. But then I think that it is possible to compare “freedom” to marriages about which the French philosopher Michel de Montaigne observed in essay on marriage: “it may be compared to a cage, the birds without try desperately to get in, and those within try desperately to get out.” Therefore, it is conceivable that our western society, which enjoyed the freedom that came with democracy, free markets, and the capitalistic system is prepared to submit to authority with enthusiasm.
Given the high price increases we all feel at the present, it is fair to say that the Fed is far behind in terms of increasing interest rates to the prevailing level of cost-of-living increases. According to the Taylor Rule the Fed fund rate should be currently at 9.81% and most certainly not at 0.25%. [For a full description of the Taylor Rule, please Google Taylor Rule.] I met Stanford Professor John B. Taylor twice and I was impressed by his modesty and integrity. No wonder, he never became a member of the Federal Reserve Board. I am mentioning the Fed’s asymmetrical monetary policy because Bloomberg recently published an essay by one of its lead editors with the title: You Say the Fed is Behind the Curve? Prove it.
I certainly believe that I can furnish with my analysis a partial proof, albeit only the future will really show whether the Fed fund rate is too low: if consumer price inflation continues to accelerate and standards of living decline further the proof of the poor judgment of the Fed will be clearly visible and accompanied by significant economic, financial, social pain worldwide. [Needless to say, none of the world’s central bankers will ever be punished should inflation cause much damage to our society.]
I want to make another point which I think will become extremely relevant. It concerns less what you own in terms of assets but where you own it. I believe that wealthy people around the world watched the seizing of assets of the Russian Oligarchs even by said neutral heavens and capitalistic bastions like Switzerland and Singapore with great apprehension. They will rightly ask themselves whether the “Tyranny of Western Bureaucrats” could also single them out one day for whatever reason, and seize their assets as well. Therefore, why not diversify the custody of their assets in less Alliance-friendly jurisdictions and spread them to “more” neutral or non-aligned countries.
Another issue concerns current political and geopolitical conditions. Mr. Biden seems to believe that he has united NATO more than it ever was. This NATO unity is unlikely to last and it is not as rock-solid as Mr. Biden believes it to be. Just a few days ago, the EU Parliament did not receive Mr. Trudeau well.
See: https://www.bitchute.com/video/TIVK1WpeGwy9/ [You need to watch these two videos - one by Miss Anderson and the other by an Eastern-European leaders. Both do not mince their words…..]
But even if I am wrong, and Mr. Biden really united NATO, a more important development would be that he managed to split the world in two major factions: the US western-led Alliance characterized by illiberal disorder, and the Rest of the world where 80% of the world’s population lives, and which does not wish to be ruled by some uneducated and mediocre western bureaucrats with imperialistic ambitions.
I am enclosing with this letter a contribution by my friend Mark E. Jeftovic who writes The Crypto Capitalist Letter (www.TheCryptoCapitalist.com). It is well-worth a read especially what Mark writes about volatility.
Finally, about the saddening Ukraine conflict, I want my readers to reflect about the following words:
“In all history there is no war which was not hatched by the governments, the governments alone, independent of the interests of the people, to whom war is always pernicious even when successful.”
Leo Nikolayevich Tolstoy
“War is hugely profitable. It creates so much money because it's so easy to spend money very fast. There are huge fortunes to be made. So there is always an encouragement to promote war and keep it going, to make sure that we identify people who are 'others' whom we can legitimately make war upon.”
Roger Waters (co-founder of Pink Floyd)
“War: a massacre of people who don't know each other for the profit of people who know each other.”
Paul Valery
I wish my readers a wonderful Easter holiday and remain
Yours sincerely
Marc Faber
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