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Regina Financial Advisors John Barabe and Madison Schenher Tip On Printing Our Troubles Away

John Barabe and Madison Schenher understand that everyone's financial situation is unique and that managing your wealth can be complex and time-consuming.  they have has an unwavering commitment to quality and service which has enabled John to build and retain a successful practice in Regina. The team of Regina financial advisors and support staff believe that planning with honesty and integrity are cornerstones to improving their clients' quality of life. They apply their knowledge to help clients make the right choices when considering all the product and service options that exist in today's marketplace. In their latest Regina financial advisors expert article, John and Madison discuss currency, printing money and inflation. 

Can a government simply print more of their currency and distribute that “wealth” to the masses to make everyone rich? We know that is not true. If it were, the people in Germany would have been vastly rich in 1923. Instead, they were destitute1. The photo below is of kids playing with a worthless currency, and besides, that is a loaf of bread priced at 4.6 million marks, all from the most famous currency collapse in history. 

Even though this memory is very distant, and nearly all of those directly affected are no longer alive, to this day Germans are heavy buyers of gold and silver. If what was done over there (printing) is now being done here, what lessons, if any, can be learned?  


Over the last 2 years, governments around the world have printed on average $834 million dollars every hour of every day, with no end in sight2. The U.S. is printing more monthly than it ever has in history2. Oh, and we are told this inflation is temporary. Or is it? 


Let’s say the U.S. cannot stop printing. They are in a bind and believe that printing is the solution. It does seem to be the case considering their reaction has continually been to print for every crisis. If this is the case, they will water down the currency value quickly. Think about what is already happening. Commodities have been gaining value and that reflects inflation. Thinking of this another way, the dollar is losing value to commodities, so stuff gets more expensive. Either way, inflation rises. Higher inflation means investors need to be compensated. A GIC holder will want a higher rate to offset the higher inflation. Extreme debt levels held by people, companies and governments suddenly become more expensive to maintain as interest rates go higher. Can the government afford higher interest rates?

Let’s take the other side of this and say the U.S. stops printing. In order to keep interest rates low, they currently print to buy the bonds to keep the bond prices at their highest ever levels (and conversely interest rates at their lowest levels – the effect of overpaying for the bonds). They are printing very large amounts to purchase this debt. If they stop printing, this extremely large buyer would likely leave a void. With this significant drop in demand for the bonds, the price would also logically drop, and interest rates go up. But that is exactly what no one can afford. Governments included. 


There is another alternative. The U.S. stops printing and defaults on their bonds. Pension plans, mutual funds, individual investors and foreign investors all own these bonds. If the government were to default, all the bonds in all these portfolios would become worthless (or worth very little depending on how many pennies per dollar of debt they are willing or able to still pay). I highly doubt this would happen but must admit it is possible. I suspect based on the track record the U.S. has with printing (as do all the other countries of the world) they will continue. History is full of examples of governments continuing to print, and then when things get worse/inflation rises - print more, and so on. 


There are other troubling events taking place in addition to the incessant printing. Since the backing of the dollar was removed on August 15, 19713, gold and silver were replaced with military might. Use our dollar to sell your oil (or else). A deal was struck with Saudi Arabia and then the rest of the OPEC nations in 1974. This was crucial to creating demand for U.S. dollars. All oil must be sold in U.S. dollars, and the reserves invested into U.S. debt. Then we have your back (militarily speaking)4. Fast forward to 2021 and Biden suspends arms sales to Saudi Arabia3. The U.S. just pulled out of Afghanistan around the end of June. Then August 23rd Russia signs a deal with Saudi Arabia in a joint military “cooperation”3. So much for the nearly 50-year-old deal that the Saudi’s had with the U.S.! Saudi Arabia was always the principal country with the U.S. oil deal. The Russian deal is most likely military for oil and is unlikely to be in U.S. dollars.


Is the demand for U.S. dollars slipping away? Saudi Arabia is the largest OPEC oil-producing nation. That would create significantly less demand for the dollar. If Saudi Arabia no longer sells oil in U.S. dollars, that would likely open the flood gates for other OPEC nations to also sell in other currencies. This is a really big deal. If countries buying oil no longer need U.S. dollars, the demand for the dollar will drop, most likely along with the value. This will cause further inflation (maybe big inflation)! 


The U.S. has well past 28 trillion in debt7. The only way this is manageable is with interest rates near zero. If the dollar drops, the value in purchasing power of the bonds drops, even if the bond price were to stay high. The more they print, the weaker the dollar will become (logic) and the higher inflation will go. 


When we said manageable, we should correct ourselves. As of 2019, 75% of the U.S. budget was mandatory spending. This mandatory spending represented 95% of their total revenue. In 2020 for the first time in U.S. history, mandatory spending alone is greater than their total revenue.  Problems, where printing is the likely solution, are not confined to the U.S. We reported long ago about ghost cities in China 8


 China’s largest real estate holding company Evergrande cannot make its payments (*9). Evergrande is 5 times the size of Lehman  (the U.S. bank that crashed the stock market in 2008). A number of other Chinese developers have now missed or delayed payments. Much more to this story than this short update allows.


Regardless of inflation and fundamentals that signal this could get worse, there are things you can do. Being aware of the dangers allows you to protect yourself and even profit from the opportunities they provide.

 - John Barabe, Madison Schenher and team.  printing cartoon

10 Posted September 15th, 2021 at 8:56 AM (CST) by Bill Holter & filed under Jim's Mailbox in






I am sending this out as material information to keep everyone informed. This is not a solicitation for any investment. Before making any investment decision, please contact us for professional investment advice through our extensive planning process. This is only meant to provide perspective and update you as best as I can from the extensive ongoing research that we do. 

The opinions expressed within this article/communication are those of the Financial Advisor and are not necessarily those of Keybase Financial Group Inc. Any data provided is for illustration purposes only. Clients and prospective clients should always read a product prospectus and fully understand all of the risks associated with the product before purchasing. Any information relating to the discussion of taxation issues is considered to be only general in nature. Clients should seek a qualified tax professional to discuss their specific tax requirements.

Third-party publications are not prepared by Keybase Financial Group Inc. The opinions, estimates and projections contained in the publication are those of the author as of the date indicated and are subject to change without notice. Keybase Financial Group Inc. makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors or omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on the report or its contents. The provision of this publication is not to be construed as an offer to sell or a solicitation for or an offer to buy any securities.

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