Let’s quickly discuss what to expect from the FOMC today at 2PM in New York. It’s time for the wizard behind the curtain to decide how to move asset prices again in our “free” market with US Central Bankers announcing whether or not they will cut interest rates or not. A couple of weeks ago, an interest rate cut was considered as done, but since the attacks on Saudi Arabia oil refineries last week, the probability of a rate cut dropped to about 50/50 yesterday. Yesterday, the probability of an interest rate cut was barely over 50%, but now as I write this article at 5AM New York time, the probability of a 25 basis interest rate cut has now crept up higher to 56.5%. Even though these Central Banker interest rate decisions lead to massive volatility in asset price behavior immediately following the announcement of their decision, we shouldn’t take our eyes off the bigger picture and be distracted by these short-term Central Banker market manipulations.
We can rest assured that the long-term plan of US Central Bankers is to still complete their mission of destroying the US dollar’s purchasing power completely, that they’ve successfully executed since their inception in 1913. This means that in the long run, even if market participants are foolishly preoccupied with today’s decision, irrelevant to long-term strategic planning, the only point of focus should be the Central Bankers’ long term plan to eventually return the Fed Funds interest rate to near zero, as they executed after the 2008 global financial crisis.
However, at least Americans can be thankful that the purchasing power devaluation of the US dollar, though more than 50 times and still growing since 1913, is not as atrocious as the devaluation of the domestic currency used by the neighbors to the South. In Mexico, though 1,000 Mexican peso notes (1 mil) exist currently, they are not in widespread circulation at the current time. However, the Bank of Mexico noted that a newly designed 1,000 Mexican peso note will be released into widespread circulation next year, and announced the design of a brand new 2,000 peso (2 mil) banknote, with the Mexican poet Octavio Paz and the writer Rosario Castellano slated to appear on the front of the 2,000-peso banknotes. The Bank of Mexico has announced that the backside will depict a landscape of the magueyero bat, the agave plant, and Tequila producing factories. The backside design of the new 2,000 Mexican peso note is ironic, because if issued, Mexicans will surely need to drown their sorrows in many drinks of tequila. The Bank of Mexico announced that they will only issue the 2,000 peso note “if it is required to meet the needs of the users.”
Another way to interpret the above Central Banker announcement is that
inflation will continue to rise significantly in Mexico in 2020, so much so
that 1,000 peso notes will be placed in widespread circulation to compensate
for the continuing rapid destruction of purchasing power of Mexican peso notes.
Furthermore, in case the destruction of purchasing power becomes parabolic, the
Bank of Mexico bankers have already designed a 2,000 peso note, ready to go
into circulation if the prices of essential living items skyrocket in the near
future, or is, as the bankers stated, “required to meet the needs” of Mexican
citizens. Someday, a 200 and 500 USD banknote may become necessary as well in
America, but the need for considerably higher denominated banknotes will not
manifest in as condensed a timeframe as being signaled by Mexico’s Central
The Bank of Mexico notices should serve as fair warning to all Mexicans now. Convert your pesos to physical silver and gold before your peso becomes nearly worthless again.