The Real World of Money
Fred Dashevsky is from Long Island New York. He attended University of New York at Albany and studied psychology, political science, and economics. Fred started in the coin business in 1984 in Northern New Jersey opening several offices in Southern California in the mid 80s. He returned to the east coast in 1989 and opened Hilton head office for SDL Inc. in 1991 with partner Andrew Gause. He has since opened his own business, U.S. Coin Capitol. Give him a call for your numismatic gold investments 800.878.2646
Will the world come to an end? Heavy predictions of a global reset for this year, but we’re still here.
There are huge fundamental problems, but it doesn’t translate into complete economic disaster. Unchartered territory now though.
The Fed is driving a 80 ton semi truck going 100 miles an hour and trying to slow it down. Will it slam on the brakes or slowly depress the brakes?
Dramatic actions required to have any impact on the size of the economy.
FED has the discount overnight window rate and the FED funds rate as their tools.
Banks have less money to loan out now, which slows things down.
With low interest rates, companies could buy their own stock. 30% of gains in stocks associated with that action. Cheap way to raise stock value.
Now that rates are higher, will see a significant correction in stock prices. Some as much as 50% drop.
Especially devastating for third world nations who owe money in US dollars. They needed to do multiple refinancings to roll over debt owed to IMF and US banks.
An unintended consequence of zero interest FED rates.
Increased interest rates aren’t slowing down price increases. Dollar is not stronger domestically. Doesn’t go as far as it used to. Seeing increases in supermarket prices, small labor prices. Consumers in US are still spending money though.
Rest of the world is far worse than US is. E.g.. Eurozone has 10% inflation rate. US dollar seems safer by comparison to other world currencies. Creates a demand for US bonds. The US is the cleanest shirt in the laundry, but it’s getting dirtier.
Can buy gold a little cheaper now, but gold will get more expensive in dollar terms. But real value hasn’t changed.
Inflation rate gets manipulated. Had to buy COLA increases in September. Govt. has a vested interest to make people believe inflation is lower so they won’t have to raise COLAs so much.
2023 2% Social Security increase is biggest increase in SS checks in 10 years. Democrats crediting it to Biden’s leadership. But COLAs have been minimum for the last 10 years.
More people drawing now from SS than are contributing. We’re printing our way out, spending more money than the GDP. Not a sustainable path.
Any reason to expect prices to come down in the next 6 months to year?
It’s not only inflation raising prices. Other problems can’t be resolved by lowering inflation. Danger of stagflation ahead.
We’re still feeling the impact of the imploded dollar from 1971-1973. Other countries suspicious of US unbacked dollars. Oil production cut. The FED held a gun to the economy.
Once inflation dropped down enough, FED slowly took foot off the brake. Reagan admin. stepped on the gas pedal with increased govt spending programs to stimulate activity. He fixed his short term political problem, and we’re still paying for all the long term debt that was incurred.
Govt spending is inflationary but it shows up down the road and not right away.
Property prices are going down. Sensitive to increased mortgage rates. Real estate market was due for some breathing room.
Fred doesn’t think interest rates will go up to 15%. Probably no more ¾ % interest rate jumps.
Bond sales graded at a D-. Govt trying to raise rates to fight off inflation, sell trillions from balance sheet, and raise money at a faster rate than ever before..
Volatility will be a problem. Reactions to FED’s actions will be more dramatic.
People who have been diversifying wealth are doing much better. Diversifying into more than one asset class is the best thing you can do to protect yourself.
Young people have time to let their stocks recover. For older people, critical to not lose principal value.
DOW as a whole has been relatively stable, but some individual stocks have lost quite a bit. E.g. Intel, Meta.
If conservatives do well in November elections, any effect? Fred says there is minimal impact from regime changes.
Biggest short term changes were when Trump became president, but no changes in long term aspects.
Changing the FED would have the biggest impact.
Trump spent money on infrastructure, which created jobs, but borrowing costs come back to haunt us.
In the long term, no one has come up with any plan to move the economy forward without creating too much inflation, to deal with $32 trillion debt we’re currently carrying, and address issues so we don’t upset economic activity.
When Reagan was president, govt. debt to GDP was 25-32% of GDP. Today it’s 112% of the GDP.
We are blowing through money at an ever increasing rate. Someone needs to slam on the economic brakes. But no one will like the massive recession or stagflation that results. It’s political suicide.
An argument for a Great Reset? It’s not likely to happen. It’s a gimmick.
Will they crash it and give you digital assets? More politically expedient to create enough money to get through a politician’s term of office and leave the mess for the successor.
We’re operating on a faith system. Faith that dollar will still have value, because it’s not backed. Gold and silver is the only thing left standing that can’t be diminished through inflation.
How is the public accepting all that the FED is doing to manipulate the real economic environment?
We shouldn’t have to worry about public wealth being changed without being able to do anything about it.
Fred doesn’t carry bricks and bars of gold bullion. Doesn’t want to deal with govt regulations about reportability and the govt’s money laundering rules.
Older coins make more sense. Their supply can’t be increased.
Silver came out of US coins in 1964. Silver quarters, dimes, dollars, minted 1790s to 1964, are a good investment. Valuations reflect metal content plus rarity.
Fred has a $5 coin minted in 1800 and now valued at $20,000. Standard $20 gold coins in mint condition for under $3,000.
Generic coins make perfect sense for an average investor and are more affordable.
Two US Capitol Coin Gold and Silver Specials:
- One gold coin, Liberty Head $20, 1860s-1907, 1 oz., mint state 64, sealed, plus 200 circulated silver quarters. $4250.
- Matching pair of St. Gaudens $20, 1907-1933, ms65, with 100 silver dollars, each mint state 64 grade, individually sealed in NGC holders. $4100.
Additional discount for buying both packages.
Retirement accounts – limited to Gold Eagle or American Silver Eagle. Investor can’t take delivery, must be stored by a third party.
Holding paper money is a losing proposition. Don’t store your wealth in a medium you know will go down in purchasing power.
Real estate is good in being a real tangible physical asset. But is subject to variations in value because of the borrowing cost of money.
Gold and silver has no third party involved. No intervention in the market value.
Fred doesn’t recommend going into debt to acquire numismatics, but it can be done.
Have some portion of your long term money not tied to paper.
November 4, 2022 @ 4:36 pm Brian
Thanks for having Fred on again. He is well spoken and easy to understand. Great for 1st time listeners. However, I wonder if you might hit on more fresh topics with him. As a return listener, I’m starting to feel like this is a deja vu show. Seems like it’s the same “cleanest dirty shirt in the laundry” and “monetary history” lessons every time. Just a thought. Thanks!