Rafi Farber: Hyperinflation is Here

Tom welcomes a new guest to the show, Rafi Farber. Rafi is an investor, author, and proponent of the Austrian Business Cycle. His investing approach includes gold, silver, and various associated stocks and investment vehicles.

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He discusses his background and why he began questioning economics as a child. Last year, he lost his job due to the pandemic and decided to start writing.

Rafi outlines the treasury market and the massive increase in debt issuance. Much of this debt is now being redeployed under Janet Yellen and will require an enormous amount of additional issuance to finance the infrastructure spending under Biden. This debt will be raised through ten-year and two-year treasuries, and the Fed will have to monetize nearly all of it.

He discusses how the stimulus programs and lockdowns are altering the fabric of society. Money supply has gone vertical (hyperinflationary), and the Fed has stopped publishing weekly figures. This is already affecting the commodity space despite a massive reduction in demand. The demand decline briefly reduced inflationary pressures. However, there will be no way to avoid the coming collapse when it becomes evident that food prices are out of control.

Rafi argues that gold and silver are not inflation hedges but instead are money itself. The only reason the dollar has any value is that it can still buy precious metals. When the true supply of physical gold is revealed, expect panic and a rapid purchasing power shift.

Futures markets consider silver to be an industrial commodity, and they are entirely unprepared for a monetary panic. We already see bullion sales going through the roof, and only a tiny percent are aware. Rafi argues that the Comex will be hard-pressed to source more metal at current prices.

He demonstrates how a run on silver is equivalent in many ways to a bank run. Such a run can become a positive feedback loop as the "price" rises. He discusses the significant short positions and why banks are oblivious to the consequences. He says, "Paper is diverting value away from real money."

We want the liberty-minded people to have the gold and silver because they are the ones we want to do the rebuilding. This is about saving the division of labor along with the future of the planet. We all have a moral responsibility to buy real money.

Time Stamp References:
0:00 - Introduction
0:33 - Background
3:16 - US Debt Treadmill
7:30 - Dollar Outlook
11:56 - Price Manipulation
20:40 - Premiums & Monetary Silver
23:08 - Silver Bank Run
25:11 - Banks & Short Positions
27:20 - Backwardation
31:40 - Rebound Conditions & YCC
35:25 - SLR & Capital Backing
41:12 - Banks & Short Covering
45:30 - Gold & Silver Remonetized?
48:00 - Wrap Up

Talking Points From This Episode
- His Background and Austrian Economics
- Stimulus, Treasury, Deficits, and Rates.
- Hyperinflation and commodities.
- Valuing gold as real money.

Guest Links
Twitter: https://twitter.com/RafiFarber
Articles: https://seekingalpha.com/author/austrolib#regular_articles
Newsletter: https://seekingalpha.com/checkout?service_id=mp_1347
Silver Article: https://seekingalpha.com/article/4404967-silver-shortages-suggest-are-only-months-away-from-higher-silver

Rafi Farber invests based on the Austrian Business Cycle Theory and covers economic trends for timing the credit cycle. His marketplace service, The Libertarian Investor, helps subscribers manage the risks and profit from the ongoing fiscal and monetary crisis precipitated by the COVID-19 pandemic. His approach uses gold, silver, and associated stocks and investment vehicles as a low-risk, high-return methodology.