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Alasdair Macleod: The consequences of imploding credit

Section: Daily Dispatches

By Alasdair Macleod
GoldMoney, Toronto
Thursday, October 6, 2022

There is a growing realisation that the world faces a combination of persistent inflation of prices and a recession at the same time. The factors driving both are visibly intensifying. Those of us versed in the cycle of bank credit are aware that it is the contraction of bank balance sheets which is driving the recession, while it is continuing currency debasement driving inflation.

... Dispatch continues below ...


Guanajuato Silver Production Up 85% from July to August

Company Announcement
Tuesday, October 4, 2022

VANCOUVER,  British Columbia, Canada – Guanajuato Silver Co. Ltd. (TSXV:GSVR; OTCQX:GSVRF) is pleased to provide an operations update highlighting the impact of additional production from the company's recently acquired Topia and San Ignacio mines:

-- 267,525 ounces of silver equivalent (AgEq) produced in August 2022; up 122,864 AgEq ounces or 85% from July, which only included production from El Cubo.

-- Cash costs per AgEq ounce continue to decline at El Cubo with July costs declining to $12.85; costs also remain in-line with expectations Companywide at $15.09 in August.

-- Silver and gold recoveries for August were 88.9% and 85.6% respectively.

The company anticipates ending the year at a run rate of approximately 3.4M AgEq ounces per annum.

James Anderson, chairman and CEO said: "Within one week of closing our latest Mexican mines acquisition we had initiated mining of silver-rich material from San Ignacio and began transporting this material to El Cubo for processing. This rapid restart again highlights our team's ability to swiftly and successfully restart mines and move them toward full production. In addition, production of silver-lead-zinc concentrates from our Topia mine in the Durango state continued uninterrupted through our integration process. Rrefinements at both the Topia mine and plant have been initiated with planned improvements expected in the months ahead." ...

... For the remainder of the announcement:

Neo-Keynesians in the establishment think the current position is contradictory, that current rates of price inflation will decline back to their 2% target in a recession, and interest rates can then be reduced to stimulate economic activity. 

The key to understanding why prices can continue to rise in a recession requires a fuller understanding of the role of credit in an economy and what it represents. Its role is far greater than commonly thought, with considerably more than several quadrillions of dollar equivalents outstanding. All economic activity and wealth are credit. This article sketches out the various types of credit, and how credit equates to our collective wealth.

It also requires us to differentiate between a currency which is anchored to gold specie and one without a specie anchor.

The former imposes a discipline on the state of non-intervention, while the latter encourages intervention. It is that intervention which leads to fiat currencies and all credit based upon it finally collapsing. ...

For the remainder of the analysis:

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