What's Wrong With This Picture? -

What's wrong with this picture?
The mainstream has built a bearish narrative around the gold and silver markets. According to this storyline, the Fed will have to keep interest rates higher due to inflationary pressure introduced by the war with Iran. That's negative for gold and silver, non-yielding assets.
In this week's Midweek Memo podcast, host Mike Maharrey points out the problems with this picture painted by mainstream pundits. He reveals two dynamics they seem to be missing and proceeds to expose the deeper flaws with the current fiat money system.
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Mike opens the show by revealing that he used to think popping his knuckles would cause arthritis. 
<blockquote>
"My mom told me it would. Her mom told her it would.
"It won't. There is no credible study backing this notion. As it turns out, this little bit of conventional wisdom is neither conventional nor wise.
"It was probably fabricated by some mother sick of hearing her kid’s knuckles pop.
"By the way, my mom also told me most of the bread’s vitamins are in the crust. My wife’s mom also passed along this fabrication. Apparently, the mother’s handbook of that era said it was a way to possibly get your kids to eat the crust.
"It just goes to show that just because something is oft-repeated and widely believed doesn’t make it true – like the current narrative surrounding gold and silver."
</blockquote>
Mike then raises the operative question for this episode. 
<blockquote>
"What’s wrong with this picture?"
</blockquote>
He's referring to the mainstream narrative surrounding the gold and silver markets. 
<blockquote>
"According to the prevailing narrative, the Federal Reserve will have to keep interest rates higher for longer to control inflationary pressures introduced into the economy by skyrocketing oil prices due to the U.S.-Iran war. The central bank may even need to raise rates this year to combat inflation. As the mainstream analysts typically put it, 'higher rates are negative for gold because it is a non-yielding asset.' In other words, since gold doesn't pay interest or dividends, investors will spurn the yellow metal to chase increasing yields in the bond market. This is why every time there is negative news on the war front, gold tanks, and murmurs about a peace deal tend to send gold higher."
</blockquote>
Mike believes the people pushing this narrative are missing two key dynamics. 
<blockquote>
"They are ignoring real interest rates, and it is far from certain that the Fed can even hold rates higher for longer due to the debt black hole."
</blockquote>
Mike explains what real interest rates are and why they matter. 
<blockquote>
"In simplest terms, the real interest rate is the stated rate you see on the news adjusted for price inflation. To calculate the real interest rate, you take the quoted nominal rate and subtract CPI. This tells you how much your investment will yield in real purchasing power over time."
</blockquote>
Mike notes that when inflation gets high or bond yields drop, real interest rates can become negative. He argues that even if yields are rising, real rates can remain painfully low. Even with relatively high yields currently, real rates are relatively low. (The real 10-year Treasury yield was around 0.8 percent at the time of the show.)
<blockquote>
"It should be obvious that a 0.8 percent real return, with the potential for negative yields in the near future, is not a good reason to dump gold or silver for Treasuries."
</blockquote>
That raises a second question. Can the Fed even hold rates higher?
<blockquote>
"Most people just assume that central bankers at the Fed will see hot CPI data and hold rates higher or maybe even raise them. However, it’s not that simple. The economy is dominated by a Debt Black Hole, and it does not play well in a higher interest rate environment. In other words, keeping interest rates elevated risks crashing this debt-riddled, bubble economy. As I have put it over and over again, the Fed is in a Catch-22. And when push comes to shove, I believe the central bankers will abandon the inflation fight to rescue the economy."
</blockquote>
Mike says we can anticipate exactly what the Fed will do when the next crisis rears its ugly head based on history. 
<blockquote>
"We know the Fed’s playbook because we’ve seen this movie three times already — the dot-com bubble, the 2008 Financial Crisis/Great Recession, and the pandemic.
"What do the Fed people do in a crisis?
"They cut rates.
"They buy Treasuries and mortgage-backed securities.
"They print money.
"They create inflation."
</blockquote>
Mike says the Fed will ultimately have to make a choice.
<blockquote>
"It can fight the inflation dragon, or it can surrender to inflation and try to keep the debt bubble inflated and the economy tottering onward. It can't do both. History tells us the Fed will pick inflation. It’s the fork they know."
</blockquote>
Mike says these facts reveal you need to take the mainstream narrative on gold and silver with a grain of salt. 
<blockquote>
"It’s not as cut and dry as your CNBC and Fox Business pundits would like you to believe."
</blockquote>
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Mike emphasizes that no matter what unfolds in the months ahead, inflation isn't going away. 
<blockquote>
"It’s not a bug in the system. As far as the government people go, it’s a feature."
</blockquote>
And why do government people love inflation?
It facilitates big government. 
Mike quotes economist Ludwig von Mises, who likened sound money to constitutions and bills of rights. They all restrain government power. 
<blockquote>
"And without restraints, people will always use and grow government power for their own gain — to the detriment of the people."
</blockquote>
This explains why inflation is so relentless. 
<blockquote>
"Simply put, the ability to print money is power. I often say that the Federal Reserve is the engine that drives big government. That’s because in the U.S., the central bank facilitates money creation. Without the relentless money printing and its mechanizations within the bond market, the U.S. government wouldn’t be able to borrow and spend to the extent that it does. That means that without currency debasement, the government would be smaller and less intrusive."
</blockquote>
Mike calls inflation a tax, and notes Benjamin Franklin understood this more than 200 years ago. Mike goes on to explain the mechanism the central bank and federal government use to levy this tax, using the pandemic era as an example.
<blockquote>
"This monetary malfeasance would have been impossible in a sound money system. Simply put, sound money checks government growth by restraining borrowing and spending."
</blockquote>
Mike insists that if you care about limited government and liberty, you have to support sound money. 
<blockquote>
"In a fiat system, government will inevitably grow, swallowing up more and more of the private economy, crowding out liberty, and grinding the citizenry into poverty. In an unbacked paper money system, the only check on the growth of government becomes the ultimate collapse of the currency."
</blockquote>
Unfortunately, there isn't much the people can do to fix their monetary system. However, they can shield themselves from its impacts.
<blockquote>
"Nothing is stopping you from holding sound money — gold and silver."
</blockquote>
Mike encourages listeners to call 800-800-1865 and talk with a Money Metals precious metals specialist today. 
<blockquote>
"Drops in the gold and silver prices are buying opportunities!"
</blockquote>
<h2>Articles Mentioned in the Show</h2>
<a href="https://www.moneymetals.com/news/2024/01/12/common-definition-of-inflation-you-hear-today-is-wrong-government-propaganda-002925">Inflation Defined</a>
<a href="https://www.moneymetals.com/news/2026/03/19/gold-the-federal-reserve-and-a-catch-22-004773">The Fed's Catch-22</a>
<a href="https://www.moneymetals.com/podcasts/2025/11/12/the-debt-black-hole-004473">The Debt Black Hole</a>

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