The Flying Frisby - money, markets and more

Money evolves constantly. Every day there is some tiny new fintech development, but it’s only when you take a step back and look at the ten-, twenty- or thirty-year  picture that you realise just how much things have changed. What is money today is a far cry from what was money when I was a child. Digital technology barely existed back then. We used cash and these things called cheques. You’ve probably heard of them.It’s not just what we use as money that evolves. How money is created - that changes too. And just this decade there has been a major evolution. That’s what I am going to talk about today.Thank you for reading The Flying Frisby. This post is public so feel free to share it.The creation of money and debtOnce upon a time you would create money by mining gold and silver. But debt-based money systems have also existed since the dawn of civilization, when clay tokens representing valuable items such as barley or sheep would be baked inside clay balls. When the debt was settled the clay balls would be smashed open.Humans, being the ingenious folk they are, especially when it comes to money, soon found that it was quicker to simply inscribe the clay with pictures of said items and so did the first systems of writing develop - hieroglyphics. Coins came along, and then the printing press, both remarkably long-lived technologies, but behind it all there was always metal.Western Europe abandoned gold in 1914 so it could print the money to pay for the First World War, and the United States did the same in 1971 amidst spiralling welfare costs and the conflict in Vietnam. Both years were landmarks in the evolution of money creation.This became the fiat era, when money became debt. Some physical cash was printed or minted, but money for the most part was created when loans were made. You borrow a thousand pounds to buy a house, the bank created that thousand pounds using the house as collateral and suddenly there was a thousand pounds in the housing market that wasn’t previously there. That’s why houses kept on rising in value - the constant introduction of newly created money through mortgages. Introduce debt into a market and prices rise. If houses were cash based, they’d be a lot cheaper. Something similar happened in the bond markets and the financial markets with the use of leverage. Leverage is just a fancy term for debt.There were occasional moments of credit tightening, but the broader trend, especially as economists and governments became obsessed with what they call growth, was for ever expanding credit.Human beings, being the greedy folk they are, especially when it comes to money, took the whole thing too far, 2008 came along and the bubble went pop.Then a whole way new to create money was invented: Quantitative Easing. Central Banks now started creating money, and they bailed out the financial system with it. Then they started using the money to buy government bonds - so they effectively printed money to pay for government spending. They also bought other financial assets. And so lots of newly created money went into the financial system and from there to the expensive houses in which many of those who work in finance live, and we got another decade or more of rising prices.But because all this newly created money went into financial assets and housing, it didn’t show up on the inflation numbers. Central bank inflation measures don’t include houses or financial assets. So they said there was no inflation. Then Covid came along. Central banks could now print money and it doesn’t create inflation, they thought. They forgot about the sleight of hand that was their inflation measures. So they printed more money and the government handed it out to people. That money made its way into the real economy and now we have inflation. And they are all scratching their heads and blaming Vladimir Putin.But the nature of money creation has changed. Now money is not just debt. Governments are creating it to fund their activities. And when central bank digital currencies come along, they are going to do that even more. As a result governments, are going to play far greater role in where capital gets allocated. We turn to the wise old owl that is financial historian Russell Napier. “By issuing state guarantees on bank credit during the Covid crisis, governments have effectively taken over the levers to control the creation of money”. They said it was temporary, but, to quote the great Milton Friedman, “nothing is so permanent as a temporary government programme”.We now have the War in Ukraine and with it spiralling energy costs - another emergency. How to deal with it? Keep with the programme. Lend money and guarantee loans. Russell Napier again: “By telling banks how and where to grant guaranteed loans, governments can direct investment where they want it to, be it energy, projects aimed at reducing inequality, or general investments to combat climate change. By guiding the growth of credit and therefore the growth of money, they can control the nominal growth of the economy.”It’s a huge win for the unelected technocrat. Nobody designed this, nobody planned it, they have just discovered they can do it. And who was at the heart of it all in the UK? Our new Prime Minister. Perhaps, among other things, it means that the age of the all-powerful central bank is coming to an end.“This is a shift of power that cannot be underestimated,” says Napier. “Our whole economic system of the past 40 years was built on the assumption that the growth of credit and therefore broad money in the economy was controlled through the level of interest rates – and that central banks controlled interest rates. But now, when governments take control of private credit creation through the banking system by guaranteeing loans, central banks are pushed out of their role. We are moving from a mechanism where bank credit is controlled by interest rates to a quantitative mechanism that is politicised. This is the politicisation of credit.”Inflation is often accompanied by high unemployment. It was in the 1970s. But we are in an era of low unemployment. Many are struggling to get the staff (at the price they are prepared to pay) - this isn’t a Brexit thing. It’s happening across Europe and the US.Many government spending programmes will be popular. They’ll create a lot more employment. We’ll probably get a load more “growth”, which means higher levels of inflation will be more acceptable (and long-lasting).Government is about to get a whole lot more involved in the economy - and in our lives. It ain’t getting smaller.How to navigate it all?We turn to our man Russell once more. “First of all: avoid government bonds. Investors in government debt are the ones who will be robbed slowly. Within equities, there are sectors that will do very well. The great problems we have – energy, climate change, defence, inequality, our dependence on production from China – will all be solved by massive investment. This capex boom could last for a long time. Companies that are geared to this renaissance of capital spending will do well. Gold will do well once people realise that inflation won’t come down to pre-2020 levels but will settle between 4 and 6%.”Gold is in a downtrend. But we like it. It’s even more permanent than a temporary government programme. But the nature of money creation has evolved once more.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.Interested in buying gold? Check out the Pure Gold Company.If you are in or around London on November 24, wearing my comedy hat, I’m doing a gig with the Gilets Jaunes - that’s my band - at Crazy Coqs in Piccadilly Circus underneath Brasserie Zedel. It’s a fantastic venue for this kind of thing. It’s going to be a great night. Please come on down.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Here at the New Orleans Investment Conference, I met up with veteran geologist and mining newsletter writer Brent Cook of Exploration Insights together with not-so-veteran, but equally on-it investor Kai Hoffmann of SF Capital. What followed is a 20-minute chat about the state of the mining markets. Those of you that are interested in the state of mining - enjoy! This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Back in the 90s, when we were in our 20s, all my university buddies and I wanted to do was travel. We wanted to go everywhere and see the world. The problem was how to pay for it.My solution was to work all year, save up, then, having spent Christmas with my folks, get a flight somewhere on Boxing Day or the day after (flights were always cheap then) and come back at the end of January. The business I was in at the time – voiceovers – never really got going until mid January, so I would end up with almost six weeks of backpacking and only miss a couple of weeks of work, if that.My best buddy, who is now a big cheese at Channel 4 so I won’t mention his name, went several stages further. He got a job compiling guide books for many years. As a result, he has been to more places than anyone I’ve ever met – across Asia, Africa, Europe, the Americas, you name it. And, of all of them, he says he reckons New Orleans was the best.So, imagine my delight when I got an invitation to come and speak at the New Orleans Investment Conference this year. Do I want to come? You betcha!The conference took place last week and I thought it might be of some use or interest to you if I shared some of my observations.Will the Fed keep raising interest rates?First up, I had a great time. The conference, organised by Brian Lundin of the Gold Newsletter and his supremely competent team, lasted four days. There were workshops and events galore, plus a host of great speakers – from celebrated resource investors such as Rick Rule, Brent Cook and Sean Broderick to macro strategists such as Danielle DiMartino Booth, Peter Boockvar, James Grant and Jim Iuorio to the unorthodox with the likes of Jim Rickards, George Gammon, Dave Collum and Robert Prechter. Over 600 people came and there were 100 exhibitors. I would say the bulk of the attendees were American, over 50 and male. There were a lot of gold bugs in the room. I felt well at home. Plus there was plenty of fun to be had in this most musical of cities by night – and great food too.I would say the overriding theme of the conference – the subject that would not go away – was the Federal Reserve Bank. How long does it continue to raise rates for? When does it pivot? At what point do debt levels become unsustainable? The US has interest to pay on $31trn of debt – that surely caps how much further it can raise interest rates? But then it has made it clear that fighting inflation is its number one priority. Round and round the subject went. Some argued that it pivots, others that it keeps on raising.There was also plenty of talk about falling real estate prices; commodities – especially base and battery metals, not to mention energy; the strong dollar and the Ukraine war. I found myself on a panel with George Gammon and Jim Rickards about the threat of imminent nuclear war that got very tin-foil hat. When I suggested that, to everyone’s surprise, Russia was losing the war in Ukraine, Rickards declared that I had fallen for the propaganda and had become a mouthpiece for the globalist agenda and the New World Order. Each to their own, I guess.Opportunities for investors in the UKAnother theme that cropped up a couple of times was investing in the UK and the opportunities there – or here, I should say. The yields on real estate investment trusts (Reits) are incredible, said Peter Boockvar, and, unlike New York where a lot of commercial property is sitting vacant, while many continue to work from home, in the UK it’s mostly being used again. Perhaps most importantly, UK property is looking very cheap to our transatlantic friends thanks to the strong dollar. I warned about the potential for rising rates here in the UK and the damage it could potentially do to real estate, whether commercial or residential, but Boockvar still felt the UK is looking like an attractive proposition at the moment. We have a tendency to denigrate ourselves here in the UK, which is why it’s so good to go abroad and meet people who see the UK in a much more favourable light.A lot of North American money is going to make its way to Europe and the UK, not to mention Japan, in the not too distant future, I would venture.I focused my talk on subjects that I have been covering quite extensively on these pages in recent weeks – energy; gold and its relevance (or lack thereof) in today’s world and China’s monumental gold holdings; and the strong dollar superseding all.There were plenty of mining companies there too exhibiting their wares. I think my favourite was probably a silver mining company by the name of Sierra Madre Gold and Silver (TSX-V.SM), which has a dynamic young management, good broker backing, some promising exploration properties and has just acquired a silver mine from First Majestic Silver (Toronto: FR, NYSE: AG) that it is now putting back into production. Pending the closing of this transaction, the stock is currently halted, which is what all silver companies should be – it removes the temptation to buy them!The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.If you’re in London on November 24, wearing my comedy hat, I’ll be doing a gig with the Gilets Jaunes at Crazy Coqs (underneath Brasserie Zedel), which is one of the best venues in the West End for musical comedy. It’s going to be a great night. Please come on down.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

I was listening to an interview the other day with entrepreneur Balaji Srinivasan, in which he argued that there are two ways by which you can raise capital: one is through investment, the other is through charity.If you are raising capital through investment, the incentive is to demonstrate strength, competence, ability, prowess, honesty and many such other qualities. The more competence you demonstrate, the more likely people will invest in you and the more they will invest. Broadly speaking, this applies to gaining employment too.On the other hand, if you are looking to appeal to people’s charity, then the opposite applies. You must demonstrate that you need and deserve this charity, and so the incentive is to demonstrate weakness, affliction, victimhood and so on. Many of these messages of affliction have made for some of the most powerful ad campaigns ever conducted. Young children and animals are probably the most evocative - from the starving Ethiopian children that inspired Live Aid to the battered seals of anti-fur campaigns.Welfare and, to an extent, healthcare can be seen as forms of charity, even education in a way. In the 19th century responsibility for the provision of welfare, healthcare and education mostly lay with the church, the friendly societies and other private bodies, but in the 20th they, for the most part, became the domain of the state.Today there are countless institutions that rely on government subsidy for their existence - from those fighting climate change or promoting green energy to those fighting perceived inequalities such as Stonewall to many in the arts. All rely on demonstrating affliction to fund themselves and exist. Meanwhile, charity has become an enormous business in the developed world, and all sorts of scandals are starting to emerge of corruption, of the huge salaries many of those who work in it enjoy (get paid lots and be virtuous) and the fact that so little of money donated actually reaches the intended recipients - less than 50% is the key stat from the David Craig book, The Great Charity Scandal: What Really Happens to the Billions We Give to Good Causes? Some charities rely on donations and subscriptions, many rely on the state and its subsidies, many on both. And the industry is heavily regulated by state (with questionable results if the above is to be believed). Regulation also costs a lot of money to adhere to.As those who read my stuff, especially Life After the State, will know, I constantly argue the state is not the best means to provide these things to the highest possible standard at the lowest possible cost, that in fact, for all its good intentions (let’s assume they’re good) the state often causes more harm than good and its role in exacerbating the health, wealth and opportunity gaps is demonstrable and large. Thus we should shrink the state as much as is possible.But because the state has grown so bloated in the West, and because it is the main provider of this second form of capital - charity - whether by subsidy or through its other systems, and because the solution to pretty much any social problem that arises is that the government “must do something”, I suggest we are getting caught up in an extremely unhealthy psychological loop. Rather than incentivising strength, competence, excellence and so on, our systems are incentivising behaviours by which that second form of capital be raised - weakness, victimhood and so on. That’s why there is so much of it about.New afflictions are being found all the time, as “entrepreneurial” spirits try and find new means to secure special favour, protection and subsidy.Thus, by shrinking the state do we shrink victimhood. We want people to be the best they can be, surely? Not the opposite.Thank you for reading The Flying Frisby. This post is public so feel free to share it. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Today we turn our attention to the physical gold markets.There is, as veteran dealer Ross Norman of Metals Daily puts it, a “disconnect between the gold price and what is happening in the physical markets.”“Our biggest challenge,” says Joshua Saul of the Pure Gold Company, “is finding enough stock on a daily basis to sell. There is a long line of demand, but very little supply. There’s more demand than at the height of Covid.”These situations don’t occur very often, but they do occur. The gold price is falling, but demand for physical gold is highI remember 2008 like it was yesterday. Gold cratered along with everything else in the second half of that year. It lost around 30% – falling from north of $1,000/oz to $720/oz. The mining companies fell by a lot more.Yet there was a scramble in the physical gold markets. Bullion dealers had never been so busy. The general public were rushing to get their money “outside the system” into an asset that was nobody else’s liability. Gold would later turn up long before most other assets. November was the low, while the S&P500 carried on lower until the following March. But the fact was there was a scramble to buy physical gold even as the price was falling.It happens. “Coins and bars,” says Norman, “are just a subset of a much bigger industry.” That industry includes the futures markets, exchange traded funds, institutional buying and selling, central bank buying and selling and, of course, jewellery. Ordinary investors may look at the state of the world and think, “I need to buy some gold”. They may be doing that at unprecedented levels. But that is not enough to balance out institutional investors who are, says Norman, “selling three to ten tonnes a day.”As I say, these disconnects do happen, but they don’t necessarily last.The US dollar has stolen the showIt’s all about the US dollar, as we have been saying on these pages for many months. In the year to date, gold is up around 13% in sterling. That’s an almost stellar return compared to stock and bond markets. But against the dollar it’s down some 8%. How long does the dollar stay so strong? That’s the question we must ask ourselves. On current form, a while longer it would seem.Norman, who has an extraordinarily good forecasting record, agrees. “The rampant dollar looks like it might be here for a while,” he says.You don’t need to look further than US interest rates relative to European interest rates and US energy dependency relative to Europe’s, to understand why we are where we are.“Never in my career did I think we’d see the circumstances we are now in and gold behaving like it is,” says Norman. “It’s extraordinary. The dollar has stolen the show. But nuclear war is a real possibility!”Gold, by the way, will survive a nuclear explosion, and none of the three types of radiation that follow – alpha, beta and gamma – will affect it.Smart investors are still buying gold bullionBut one of the few bright spots in this market is what Norman calls “the literate investor” who continues to support it.Saul of Pure Gold makes a similar observation. His company makes a point of talking to clients as they buy and sell, to understand their motivations. As a result, they build up a lot of qualitative data.“Everyone’s looking to protect their wealth in a time when things are really uncertain”. But there have been two notable trends he has observed.First, there has been a notable increase in buyers from the financial world. “Traders, investment bankers, financial services, accountants, lawyers – they’ve been buying large sums. I find this notable: “Their trade sizes are bigger. The median trade size is probably three times bigger than it was a year ago – and during Covid.”Saul says many of them are worried about what is going on behind the scenes at the banks. “These are considered investments, where there is a lack of alternatives.”The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.Money is moving out of property and in to goldThe second notable trend is the exodus of money from real estate – whether commercial or residential.“Property investors normally like to remain liquid, so they have cash on hand ready for the next deal. Buy-to-let landlords, commercial landlords, people who buy big buildings and let out floor by floor, developers. Companies and individuals. A lot of them have a lot of cash. They have an appetite for debt, but the increased cost of debt, plus the possibility that the underlying asset will fall in value means there is too much risk for them. They’re now parking that cash in physical gold.”“We are also seeing a growing amount of people with properties on the market, who when their property sells will move their capital into gold. Many are removing their exposure to debt that they might have taken two or three years ago.”What we are seeing then is capital flowing from finance and from real estate into gold. I find that telling. Thank you for reading The Flying Frisby. This post is public so feel free to share it.China is driving demand for gold bullionThere’s a shortage of physical metal. Premiums are higher than normal, as a result. But that is not deterring buyers. Guess where premiums are highest? Yup, China.That’s where the demand for gold bullion is highest.“As much as $50 over spot in some places,” says Norman. “Normally arbitrage irons this out, but that’s not happening.”The trend of gold making its way from West to East continues.Here in the West, on the ground, there is a scramble for physical gold that you would not know to look at the gold price. It won’t last. It never does.The technicals for gold do not look great at all; it’s in a downtrend. That cup-and-handle formation that had us so excited earlier in the year looks like it may have been invalidated. As in 2008, gold looks like it might need to go lower before it goes higher. But at grass roots level there is a lot of smart money buying physical gold. Somebody has got this wrong. The question is, “who?”If you are looking to buy physical gold – coins or bars – let me recommend The Pure Gold Company in London, with whom I have an affiliation deal. You can take delivery or store it safely allocated to you in vaults in safe jurisdictions. The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

I stumbled across this 2013 blog earlier today. I’m posting it because I thought you might enjoy it, and partly because it’s relevant to a thought piece I’ve been working on that I’ll be posting later in the weekOoh, what fun There's nothing surer The rich get rich and the poor get poorerPeggy LeeMost of us now enjoy luxuries that would have been unheard of a hundred years ago - running water, electricity, computers, phones, cheap food and clothing. Yet, despite all this, there is discontent. Huge amounts.The problem is inequality. Inequality is everywhere, it is increasing and it comes in many different forms.There is the wealth gap.The wealthiest 400 people in the world are worth more than the poorest 140 million.70% of the land in the UK is owned by less than 1% of the population.When once CEOs of major corporations earned 20 times more than their employees, now they can earn a thousand times more. A Burberry sales assistant (according to Glassdoor) earns £16-17,000 including commission. The Burberry CEO, Angela Ahrendts, received £16.9 million last year. I shudder to think what the Burberry factory worker is getting.Over fifty per cent of young people believe they will never own a house, while the average age of the first-time buyer in London is now over 40. He or she'll be a pensioner before they can start a family.We can build a decent house for less than a hundred grand, and only 2.5% of the UK is actually built on, so how can we have a society in which houses have got so expensive that most young people think they will never own one?There is the health gap.Unbelievably - and despite best intentions - health inequality, as measured by life expectancy, has actually increased since the founding of the NHS in 1948. There is also huge discrepancy in the quality of care received between the top and bottom of society.And we have the opportunity gap.Despite billions being spent on education, despite more and more taxation, subsidy, legislation and regulation all with the intention to spread wealth and bring equality of opportunity, the top positions in just about every area of the economy you can think of - politics, law, media, finance, medicine, even manufacturing - are dominated by the 7% of the population who went to public school.Even in the Olympics you were five times more likely to win a medal if you went to public school.Something is wrong. People are, rightly, angry about it.Tax the rich more. Stop companies like Google evading their tax. Clamp down on immigrants. Stop benefit cheats. Spend more on education, on health care, or is it infrastructure? Increase regulation of banks. Build more houses. Subsidize wind farms or environmental initiatives. More austerity. Everyone has their own idea about what needs to be done and over the last decade a huge ideological battle has been unfolding as people argue about it.But all these ideas and many more besides, some of which come from the left and others from the right, all involve the same thing: that the government does more, that it takes action.I suggest the opposite - that the ONE thing government should do is LESS. I suggest that, counter-intuitive though it may seem, the huge rise in inequality is BECAUSE of government and the unintended consequences of its actions.For a hundred years the state has got more and more involved in our lives. It now look after our birth, our education, our health, often our employment, our old age, even our burial. Through its money and interest rates, through its taxes and subsidies, its rules and regulations, it looks after our economy. The more it does, the greater these gaps have all grown.It's time to try something else - Life After The State.Life After The State by Dominic Frisby is available on Amazon. The audiobook is available at Audible.And if you happen to be in the Louisiana neck of the woods next week, or fancy a trip, I’ll be speaking at the New Orleans Investment Conference, which runs from October 12-15, at the Hilton New Orleans Riverside. There are lots of big names on - Rick Rule, James Grant, George Gammon, Jim Rickards, Doug Casey and many more besides. Come and say hi!The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

We’ve seen incredible rallies across the board this week.After a worrying sell-off late in the day and into the close on Friday, the Dow and S&P500 all both took off on Monday, rallying by over 3%. They then followed through with gains of another 3% on Tuesday.The Nasdaq was up by even more.Given that tech was so totally beaten up, I guess the bigger rally is no surprise. You could apply the same logic to precious metals. Silver, sold down into the abyss, rose by eight and a half percent on Monday. The call for a multi-week rally in silver is looking good.Even the once internationally sought-after currency that is sterling has seen a barnstormer. A week ago everyone was talking about parity with the US dollar. It was all over the headlines (which usually means it’s time to take the other side of the trade). Even Turkey’s President Erdogan, with a display of hypocritical chutzpah that would capture the admiration of even the most duplicitous of tyrants, was deriding it. It has “blown up”, he said. He’s not been looking in the forex mirror lately at his own lira, it seems.Sterling went from $1.03 almost to $1.15.What we’re looking at is a typical short squeezeI want this bear market over as much as you probably do, and I hate to go all prophet of doom on you, but these kinds of rip roaring rebounds are just that: rebounds. They are not so typical of bull markets.Let me give you some depressing stats. 1929, 1931, 1932 and 1933 were among the worst years of in US stockmarket history. Famously so. Yet, on a percentage basis, the ten biggest rallies in the Dow Jones Industrial Average i n the first half of the 20th century all took place in those years.Prior to this decade, the best days in the stockmarket since 1950 were, says JC Parets of All Star Charts, in 1987, 2002, 2008 & 2009. Again, 2009 aside, not a great time to buy stocks.These kinds of spikes are not typical of bull markets. That’s not to say they don’t happen in bull markets, but they are more typical of bear markets. Bull markets tend to grind higher. Increased volatility, heightened fear and risk, big up days and big down days, short squeezes: these are all things you see in bear markets.Indeed, it’s a typical short squeeze. There have been lots of sellers. There are lots of people with big bets that prices will continue falling – a lot of shorts – and suddenly there are no more sellers in this crowded market. As the price turns, the shorts quickly cover their positions – which means there are suddenly lots of buyers – and the market rockets higher. It’s the sudden and rapid covering of positions that causes the spike up.Of course, sometimes you get these spikes at the final low. March 2009 was one example. March 2020, at the height of the Corona panic, was another. The problem is that on the way to that final low there have been many such up days and down days, so, in real time, you don’t actually know which this is the final one.“From false moves come fast moves in the opposite direction” is a phrase you may have heard me utter on these pages several times. Friday’s move down was one such example. A break down to new lows, below the June lows, everyone thinks we are going lower. Rumours are flying about. There’s an emergency meeting of the Federal Reserve Bank on Monday. Credit Suisse is going under. The implications of this are bigger than Lehman in 2008. Then the market turns around and rips everybody’s faces off.Rip-roaring up-days are are normal for bear marketsAs I write now, most markets have turned down again – though at present it looks more like consolidation action after the gains of the last couple of days.Here’s the S&P500 over the past year. Just look how many rip roaring up-days there have been in 2022, and yet it has been a horrible year for longs.An obvious magnet for this move is that falling blue trend line just around 4,010. Another potential target would be the 3,850-3,900 area.I’ve also shown that false move from which this fast move has come: the break below that dashed blue line which marks the June lows. What do you think? Is the final low or have got more bear market action to come?Price action tends to set the narrative, and the stockmarket tends to lead the broader economy, so even if you are of the mind that this economic downturn is not over, the stockmarket can still quite easily go higher. We are going into a good seasonal period for stocks. There’s probably too much pessimism about. We have the US mid-term elections in a month, which will give us a better idea of where things are going politically. I’ll change my opinions as events develop. I always do. We all do. But for now I think the likelihood is that this is a bear market rally.And, as for silver, I don’t think this is the beginning of the big kahuna to $50. Low- to mid-20s is my target.And if you happen to be in the Louisiana neck of the woods next week, or fancy a trip, I’ll be speaking at the New Orleans Investment Conference, which runs from October 12-15, at the Hilton New Orleans Riverside. There are lots of big names on - Rick Rule, James Grant, George Gammon, Jim Rickards, Doug Casey and many more besides. Come and say hi!The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Back in 2007 comedian Susan Murray phoned me up with a question.She was just arranging a new mortgage and she wanted to know where I thought interest rates were going. Should she get a fixed or a variable rate mortgage?I couldn’t make that decision for her, of course. But I could see there were underlying problems with the economy – quite serious ones – so the safest option, if there was affordable, seemed to be a fixed-rate mortgage. In the event something goes seriously wrong in the broader economy, at least she was protected against spiralling interest rates.Susan went and fixed her mortgage at 6%. Turns out it was pretty much the top of the market for mortgage rates. They duly plunged as central banks slashed rates and then printed money following the financial crisis. She’s never forgiven me. “Cost me a ruddy fortune that bloke” she always complains whenever my name comes up.Cheaper mortgages mean more expensive housesI may have seen 2008 coming – I was such a gold bug at the time – but I did not  foresee quantitative easing nor the extent to which interest rates would fall. Money got so cheap.By September 2021, barely a year ago, you could get a five-year fixed rate deal for 1.3%. It seems inconceivable today that money could be so cheap. To be fair, it seemed almost inconceivable at the time. No wonder everyone levered themselves up the eyeballs.I have long argued that, more than anything, it is cheap money that has driven up house prices. Everywhere you look the standard solution to unaffordable housing is that we need to build more, especially in and around London. But London has been a building site for a decade or more. Goodness knows how many new build flats there now are, but all that new build hasn’t brought prices down. As I’m forever quoting: between 1997 and 2007 the housing stock grew by 10%, but the population only grew by 5%. If house prices were a function of supply and demand, they should have fallen slightly over this period. They didn’t. They rose by more than 300%.Then you see that mortgage lending over the same period went up by 370% and you quickly realise it was newly created money that pushed up prices in a decade of loose lending, which gave birth to the national obsession that is house prices. Houses were no longer places to live, but financial assets. If you introduce new debt into a market, the higher prices will go. Look at student loans.Mortgage lending doubled again in the ten years from 2009 to 2019 and house prices rose by over 50%.Cut off the tap that is cheap money, and house prices will quickly come to levels concomitant with earnings. The two have long since been distant friends.In 1995 the house price to income ratio was below three – even in London it was only just above. Now it’s seven. The average house is seven times average income. In London it’s 11. And we wonder why families have got so small.Are interest rates only going one way from here?With inflation spiralling, bond rates rising and the US dollar spiking, money is suddenly not so cheap any more. And it’s getting more and more expensive. The UK is not alone in this, by any means, but the problem is more acute here because our economy is so geared to house prices.The Bank of England has made an absolute mess of protecting the currency, declaring it will not hesitate, while hesitating. Rather like the way it broadcast its gold sales to the market between 1999 and 2002, thereby sending the gold price to all time lows around $250/oz, so it is now broadcasting its gilt sales and quantitative tightening – and it has sent that particular market plunging too. The announcement sparked the sharp sell-off in gilts that began the day before Chancellor Kwasi Kwarteng’s mini-Budget. It’s as though the two departments – the Treasury and the Bank of England – don’t coordinate.The trigger may have been the Bank of England’s announcement, or Kwarteng’s budget. Whatever. The cause is over ten years of QE, zero interest policies and all the rest of it.It’s interesting through. At the first signs of panic, they started printing again. That tells us where they will go. Yesterday morning I would have said that interest rates can only going to go one way, and that means the cheap money taps that drive house prices to such unaffordable levels are now being turned off. Lenders clearly felt the same way. I gather over 900 mortgage products were removed from the market in under 24 hours. Smashing the record around 400 set during the Covid panic.But then the Bank of England started printing again.The UK housing market, particularly in and around London, has been an irrational, insatiable monster for decades. Anyone who calls the top has ended up with egg on their face. But we are levered up to the eyeballs. It’s not just a matter of no more cheap money coming in. There is also the other side of the coin, something I remember from 1989-1993. People can’t make their interest payments, so they start to sell. If house prices come down 10% or 15%, it’s often the case that the house becomes less valuable than the debt – negative equity strikes. I really like Kwarteng’s Budget. I think he has made the right choices. Cutting taxes is good. But a falling housing market, no matter how much growth there is elsewhere, will see the Tories kicked out at the next election. How do they prop up the housing market without cheap money? I’m sure they’ll find a way. They always do. Or will they?If you are worried about what is going on and want to buy physical gold or silver, my recommended bullion dealer is the Pure Gold Company with whom I have an affiliation deal. More here. My guide to buying bitcoin is here:Thank you to all those who came to my lecture with funny bits, How Heavy?, last night. What a great evening. Next West End show is November 23 at Crazy Coqs - that’s not a lecture, but me and the band with lots of unacceptable songs. Tickets here.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Bitcoin was built in reaction to all the money printing that went on in the wake of the financial crisis. The Times’ headline “Chancellor on Brink of Second Bailout for Banks” was even embedded into the very first block in the blockchain – the genesis block. Here was a money system that nobody, whether government or hacker, could print or debase. The rules were set in code. The inflation rate was clearly laid out. And the system, rather than rely on trust – whether in banks, central banks, payment providers or governments – was based on mathematical proof and computer power.So here is an apolitical, censorship-resistant, trust-less, hard money.And we saw a very good use case for it this week.PayPal plays the cancel gameJournalist Toby Young, who is associate editor of The Spectator, has, for as long as I’ve known him, been setting up organisations to try and improve people’s lives. Disappointed with the lowering of standards in schools, he was one of the founders of the first Free School in West London. In 2020 he set up the Free Speech Union to help defend people threatened with cancellation. And his news and commentary website the Daily Sceptic was born in reaction to all the misinformation and censorship, especially by big tech, that emerged during Covid. Young’s views are actually pretty moderate. He’s a centre right, old school Conservative. But his ideological enemies do not like him at all and they work tirelessly to bring him down. He has lost something like five jobs because of what he calls the “offence archaeologists” digging up things he said decades ago, quoting them out of context and then being offended.Last week, PayPal, out of the blue, closed down his personal account for “breaching its Acceptable Use Policy”. Then, barely a few minutes later, it shut down the account for his news and commentary website the Daily Sceptic. Then a few minutes after that it closed down the accounts for the Free Speech Union.This is no small disruption, and it undoes the many hours, days, months and years of hard work his team have put in building up their subscriber bases. About a quarter of the Daily Sceptic’s donor revenue arrives via PayPal and a third of the Free Speech Union’s 9,500 members pay their dues via PayPal, Young says.Young says, “I did some Googling and discovered that numerous organisations and individuals with dissident political views have had their accounts closed by PayPal recently, particularly on the three issues you’re not allowed to be sceptical about: the lockdown policy and other Covid restrictions, the mRNA vaccines, and the ‘climate emergency.The Daily Sceptic frequently publishes articles on those subjects and the Free Speech Union may have fallen foul of another taboo – defending people who’ve got into trouble with HR departments for expressing their gender critical views.” How is PayPal able to do this without warning? Because it can.Young is by no means the first. It did the same thing to Wikileaks in 2010, probably under pressure from the US government about whom Wikileaks was disclosing unwanted information. (Unfortunately, this backfired as donors began using bitcoin and the bitcoin Wikileaks received rocketed in value to make Wikileaks a potentially very rich organisation (assuming it managed to hold on to some of them).It did the same to Alex Jones. Earlier in the year it cancelled academic and biologist Colin Wright for articulating his criticisms of the view that sex is a social construct. Just yesterday Us For Them, the parent group which campaigned to keep schools open during Covid lost their account, and so did another group Gays Against Groomers.PayPal founder Peter Thiel is an outspoken libertarian and probably on the same philosophical side of the argument as Young, but he is also a businessman. Paypal will do whatever is asked of it in order to survive. You can be sure that, in order to survive as a business and effectively become a challenger bank, especially early in its evolution, it will have had to demonstrate that it could not be used as a vehicle for any kind of illicit activity, especially money-laundering, and this is why it can be so stringent. It will toe the line wherever necessary.But Thiel is no longer Paypal’s CEO and, like so much of big tech, what started out one way is now not on board with the free speech ideals of its founders, as evidenced by all the censorship that goes on. Indeed more and more evidence is growing that big tech, especially Twitter, is censoring content according to the instructions of the US government.A number of prominent individuals have spoken up in favour of Young - from Lord Frost to Joanna Clery to Luke Johnson - and a number of others have closed their PayPal accounts, so it may be that the Young accounts get re-instated under pressure.But the moral of the tale remains. You are using trusted third parties that can no longer be trusted. If you use non-government money - ie bitcoin - the taps cannot be turned off quite so easily.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.Separating money and stateMore than anything else, in every book or every column I’ve ever written , I have argued for one thing: the separation of money and state.When one body in a society has the ability to create money at little or no cost to itself, it is inevitable that body will have disproportionate power and influence within that society. If you are looking to understand how it is the state in western societies has grown to be so enormous - something like 50% of GDP compared to the 10% area it occupied at the turn of the 20th century - then look no further than our system of fiat money.If you want to understand the inequality gap, why young people can’t afford a house, all that - look no further than our system of moneyIf you are looking to understand why western families so small, look no further than our system of money, in which government now owns more than 50% of your labour.  The primary reason given when asked why people have small families is that they can’t afford bigger ones. Both parents are having to work. The government - at over 50% - is their biggest cost. Only the very bottom on large welfare and the very rich can afford big families The 90% in the middle can’t. So we import our youth from abroad instead and then wonder why British culture is being eroded away. It’s the same across the west.Of course some states are more benign than others and our 21st century social democracies, for all their woeful waste, are preferable to many of the governing systems found in other, more tyrannical corners of the earth, but the damage has still been enormous and now we seem to be careering towards a far more nefarious destination.Money should just be money - a means of exchange, a store of value and a unit of account. Instead it has become a tool of government. A weapon of government.Whether it is suppressing interest rates to boost the housing market, printing money to bail out banks or the entire economy during Covid or freezing the accounts of political enemies (the truckers in Canada, or the entire country that is Russia), finance is being weaponised. Governments weaponise money because it is an easy tool for them to get the results they want quickly. It’s a lot easier to sanction Russia and freeze it out of the banking system than it is to go to war. It’s easier to cut off the truckers’ funding than it is to confront them. It’s a lot easier - and quicker - to print the money you need to bail out the banking system than it is to collect it in taxes – which is what rulers from another age would have had to do. It’s a lot easier to suppress interest rates and collect the inflation tax than it is to impose direct taxes or rein in spending.But the net result of all of this is that money gets debased, the state grows and is empowered, the inequality gap gets bigger, freedom is eroded, families get smaller, nobody can afford a house and yet more government becomes the answer to everything. We get top down diktats instead of bottom up growth. One decision up top counts for way more than the aggregation of millions of individual decisions from the bottom. And so on.The weaponisation have money has already begun. The irony of such actions is that, as with Wikileaks, they will accelerate the adoption of censor-free, non-state alternatives, of which bitcoin is the most prominent example. The US, by confiscating Russian dollars and freezing it of the banking system, will accelerate the creation of a non-US international system of money to be used by nations, especially Russia and China, that do not want to be beholden to the dollar. In the long term it may backfire, but in the short term it works: it shuts off the funding taps and creates considerable hardship and inconvenience.What to do? I use Paypal all the time, as buyer and seller. It’s convenient. But I really should switch to another payment processor. The others may not be as censorious as PayPal, but they will be if pressured, you can be sure of that. Do not leave large amounts of money with these companies.As we head into a cashless society we are even more vulnerable. This is why the prospect of central bank digital currencies, which, by the way, are almost inevitable - technology is destiny - fills me with such dread. Programmable money will give the state even more control and influence. Your every transaction can be monitored, putting us in the world of Orwellian surveillance states. Certain transactions could simply be outlawed. You might not, for example, be able to buy from or sell to bodies that are not government approved. Taxes and fines can be deducted without your approval. Central bank digital currencies give huge scope to behavioural economists and the ministries of nudges. You can be goaded into all sorts of decisions you might not otherwise have made. Social credits systems can be imposed. Are you a good citizen? Then you get the favourable rate of interest, good loan deals and other incentives. Do you articulate wrong-thought on the internet? Did you not have the vaccine, like we asked you to? Are you suggesting the climate emergency is not real? Then you will be given less favourable rates. If you are a really naughty boy, your account might be frozen altogether.I gather that the European Central Bank and perhaps even the Bank of England already have the tech ready to go for CBDCs. They are just waiting for the crisis to implement them.In such a world, and that does seem to be where we are heading, there is a very strong use case for bitcoin. I urge you to own some.If you are in London or nearby on September 28 or 29, please come to my lecture with funny bits, How Heavy?, about the history of weights and measures. It’s in the West End at the Museum of Comedy and it’s a 7-8pm show so you can come along and go out for dinner after. You can buy tickets here. This is a very interesting subject - effectively how you perceive the world. Hope to see you there.If you want to buy physical gold silver, my recommended bullion dealer is the Pure Gold Company with whom I have an affiliation deal.If you want to buy bitcoin, my guide is here:The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.A shorter version of this article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

About 25 years ago, I was giving a speech at my father’s 65th birthday party. There were seventy or eighty people at the dinner and, as Dad was a playwright, most of them were theatricals.I’m a comedian, it was a fun occasion, so I wanted the speech to be funny. There were a few entertainment VIPs in the room, so there were professional as well as personal reasons to make sure my speech was as good as possible. But it was also a very personal occasion - a landmark in my dad’s life - so there was no way I was going to crowbar in bits from my act. I wanted the speech to be special: I love my Dad very much and I wanted to say so publicly. But I also didn't want the speech to descend into an embarrassing, gushing, sentimental affair. It was by no means the hardest speech I've ever had to give, but there was still a balance that I had to get right, and I felt a bit of pressure because there were so many professional performers in the room who were way more experienced than me.As I was speaking, and I guess I was feeling a little nervous, I noticed someone looking at me. Of course, the whole room was looking at me, but this was the only person I noticed. He had friendly blue eyes, narrowed in a frown of intense concentration, and he seemed deeply interested in what I had to say, and very sympathetic to the difficulties I was having making such a speech. I don't know if I was projecting my own imagination, but there was a wise, kindly look to him. I’d never noticed anybody listen like that before.It was a few moments before I realised it was the actor, Timothy West. Thinking about it later, it made sense to me why Timothy West had been such a popular actor with his peers. He listened so well. In a room of eighty people all doing the same thing– his was the listening I noticed.(Any aspiring actors reading this: work on your listening. It’s a crucial, yet underrated skill and one that is rarely taught. Teaching is concentrated around the bits when you are doing the talking. Watch what wonderful listeners many great actors are.)Fast forward a couple of years and I was doing a set on the Radio 4 show, Loose Ends. This was around 1999 and, in those days, the show was recorded live, but the only audience you would have were the four or five other guests on the show who would be sitting in the studio with you, along with the host, Ned Sherrin. You got some real VIPs on that show - I used to do it quite a bit. Off the top of my head, I remember appearing with Jackie Collins, Danni Minogue, Divine Comedy, Mariella Frostrup, Sir Humphrey Burton, The Proclaimers, and many more besides. But most of them would be thinking about their own bits, so doing comedy in that little studio to four or five people who weren’t that interested could be a bit like doing comedy into the void. Comedy is hard without an audience - even if by the time it made it out of the radio, it seemed to work. I think it was the first time I had done the show, so I was nervous. There I was, doing my Ludwig The Bavarian act, all dressed up in my lederhosen costume, with all sorts of nerves rushing through my head as I did my act to no audience, when there it was again. The look. The kindly, listening, I-know-what-you’re-going-through-and-I’m-on-your-side look. This time it was Michael Parkinson, one of the guests on the show. While all the other guests, and, to an extent, Ned, were wrapped up in their own stuff, Parkinson took time out to listen to me. Straight away I understood why he had been such a successful chat show host.Thank you for reading The Flying Frisby. This post is public so feel free to share it.The Today ProgrammeWe move on over ten years to 2012 and my first book, Life After the State, which, as the title suggests, makes the case for a lot less government in our lives. On the day it was published I was invited onto Radio 4's Today programme to talk about the role of the state. My publisher, Dan Kieran of Unbound, told me 'getting on the Today programme is the Holy Grail for an author. You’re very lucky. You’re on at the best time, peak listening time, just before 9. Everybody will be listening. The prime minister will be listening.”To say I was nervous is an understatement. 'This is the Today programme,' I told myself. 'For really clever people. It’s not for comedians who’ve decided they want to write about economics. It’s the BBC, the Ministry of Media. The last thing they’ll suffer is some non-economist comedian calling for a smaller state. You are so going to be found out.’In the Green Room beforehand, I could barely speak. 'Would you like a cup of coffee?' 'Oh, no thanks. Actually, yes please. Er no, no. Actually, yes. Erm, not sure.' ‘I’m sorry?’I was to be interviewed by James Naughtie and there was a nice chap by the name of Neal Lawson from left-wing think tank, Compass, who would take the opposing side of the debate. There were various other people in the studio, all deep in notes and preparation for their next slot. None of them looked up as we came in. If I had my life again I’d answer one key question about collectivism differently - and I still get cross with myself about it - but overall I guess I did ok. However, mid-interview, while I was talking, I could feel somebody looking at me. I looked to my left, away from the people I was talking to, Naughtie and Lawson, and there, staring at me intently, was John Humphrys. He’d looked up from me his notes and, with his eyes narrowed slightly, now seemed to be deeply interested in what I was saying, even though he was nothing to do with this segment. His listening carried that same mixture of interest, intense focus, kindness and understanding that Timothy West’s did all those years ago.Just as with West, I felt I gained some understanding as to why John Humphrys has been so successful in his extremely competitive profession.Afterwards I went and gave him a copy of the book.“Have a read and see what you think,” I said. “But I doubt you’ll be on board with all this anti-state stuff.”“You’d be surprised,” he replied.Keynote FarageJust a few months later I was speaking about gold at an investor’s show. Tom Winnifrith, the organizer, had managed to get Nigel Farage as his keynote speaker. This was years before the Brexit vote, but, thanks to the internet, his speeches at the EU Parliament were already starting to go viral.Afterwards, he and I sat down and started talking. All sorts of people were bombarding him for photos and signatures, and he was very gracious to everybody who pestered him, but at the same time he managed to convey the impression that he was really interested in talking to me. And, as I talked, there was that same look again – eyes narrowed slightly, kind, wise, interested, focused on you and you alone.If you say the names John Humphrys or Nigel Farage, kindness is not the first word that springs to mind with either. But that was what I saw. Nor is Farage known as great listener, but my experience was that he is. I’m sure it’s his listening to people as he travelled up and down the country that made him so popular at grass roots level and helped him build such a following.Farage in person, as his GB News show, especially Talking Pints, is proving, is a far cry from the monster many of his opponents, especially the Centrist Trots who write for the Guardian, have made him out to be. My dinner with Jordan PetersonA few days ago I was lucky enough to be invited to dinner with Jordan Peterson. It’s funny. Peterson is one of the biggest stars on the internet. He is adored by so many yet there are still quite a few people who have no idea who he is. My manager thought I was going to dinner with Jordan Henderson.Andrews Doyle and Shaw, the organisers of Comedy Unleashed, comedian Simon Evans and author Jeremy Hildreth were there as well as Peterson’s minder (who took the photo below).It was amazing how quickly we got through the niceties and moved on to the interesting stuff. Within a few minutes of sitting down, we were talking about lucid dreams - these are dreams that you know are dreams while you dream them.I had a lucid dream last year, in which I met my father (who died in 2020) at a house party and, in the kitchen, started updating him on the progress I had made with Kisses on a Postcard, the new songs I’d written, the edits and so on. After a while I said, “This is a dream, isn’t it?” Dad smiled and nodded.So I mentioned at the table that I had had this lucid dream last year in which I had had this conversation with my dead father. Peterson’s head flashed round and he looked at me as I spoke. And there was that look again. That same Timothy West, Michael Parkinson, John Humphrys, Nigel Farage, slightly squinting, focused look of kindness, sympathy, empathy and genuine interest.Never mind how articulate he is, I’ll bet one reason Peterson is so popular is because he listens. In fact, one reason he is so articulate is because he listens. He replies to what people actually say, rather than what he thinks they’ve said, and that centres him in the moment and thus in the truth.So there we are: people who have the look. What’s the moral of all this? Listen, I guess. Don’t talk. Listen.ADDENDUMI saw just how popular and loved Jordan Peterson was only an hour or two later. Over dinner somebody suggested that he do a set at Comedy Unleashed later that evening, and he agreed to read a comic poem he’d written. I was MCing, and I introduced him as the open spot, saying something like “we like to bring on new talent at Comedy Unleashed, so we give people short spots and if they’re any good, they can progress to a full spot, please welcome Jordan Peterson”. The audience at first couldn’t believe what they had heard. Then, as he came to the stage, they rose to their feet and gave him a standing ovation.I might have ended up compering what may be Jordan Peterson’s only ever comedy spot. Thank you for reading The Flying Frisby. This post is public so feel free to share it.If you are in London on September 28 or 29, my lecture with funny bits, How Heavy?, about the history of weights and measures is coming to the Museum of Comedy. It’s a 7-8pm show so you can come along and go out for dinner after. The lecture will give your evening a strong intellectual foundation. You can buy tickets here. This is a very interesting subject - effectively how you perceive the world. Hope to see you there.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe