America Is on the Cusp of a Second Bank War. (Uncut) 02-13-2025

America Is on the Cusp of a Second Bank War.

We’ve seen a couple of days ago that Elon Musk was in the Oval Office with his son who’s called X, and he spoke about the fact that the Constitution only has three branches of government, the judicial, the legislative, and the executive. But he said the bureaucracy has become so powerful and so unaccountable that they have to do something about it. And I agree.

And I think the Federal Reserve System is the most, yes, most harmful and most out of control bureaucracy that there is. Thursday, February 13th, 2025, Monaco 64, Home of Alternative Economics, and Contrarian Views. Well, today we’re going to look at history and the present.

It seems to me that we could be on the cusp of a second bank war. And of course, we’re going to look at the first bank war. Could we see Trump versus Powell just like we saw Jackson versus Biddle back in the 1830s? I think it’s possible.

But before we go deeper into the topic, just want to have a look at some of the news pertaining gold, the gold market. Gold’s still doing really well. We’re above 2900.

I saw a post by Bai Xiaojun, or Oriental Ghost. He’s a Chinese individual that posts on X. And he said, not only in South Korea, but also on JD.com, the largest e-commerce platform in China, and the world’s largest gold retail e-commerce platform. Multiple gold bar varieties are out of stock.

And what’s happened in South Korea? Well, Ronan Manley reported here on X yesterday. Translation, it has been confirmed that the Korea Mint has stopped supplying gold bars to major commercial banks. This is because the demand for gold, a safe asset, has soared due to Trump’s surge, causing a difficult phenomenon around the world.

So I reported it here on the 29th of January. I was one of the first ones to see that FT story, where it said that the Bank of England had delayed delivery, spot delivery, up to eight weeks, and that I thought that was a massive piece of news, very significant. And since then, of course, gold has gone up from $27.60 to $29.11. So a huge move in the price of gold, maybe not percentage-wise, but in nominal terms.

And I think it’s going to continue. And it’s permeating all over the world. And the head of the snake, so to speak, is in London, and the bullion bank’s in London.

And they’re desperate to get physical. Why wouldn’t the Bank of England be able to deliver gold in a few days? Well, probably because a lot of that gold in their vaults have been leased out many times over. And they have to find the gold out there.

How do you find the gold? Well, you have to buy it. And yes, one of the Bank of England officials last week during the press conference after their MPC meeting said that, yeah, everything’s fine. It’s just that we have to find slots for delivery.

And it’s taking up to eight weeks for them to find slots. He said the courtyard of the Bank of England was blocked. So sometimes transportation can’t get through.

But I did a little bit of analysis with AI. And I asked how long it took to ship gold from California or San Francisco to London in 1849. And they were shipping a lot of the gold from the rush in California to London.

And AI or it was actually deep deep seek. I also asked chat GPT. They’re about the same.

They said that it would take from four, from four, two months, excuse me, to eight weeks. And you would say from San Francisco to Panama. And of course, the canal wasn’t built in 1849.

So they had to go and there’s no railroads in Panama. So they had to go with horse and carriage and a wagon or a wagon for gold across the isthmus of Panama, get a ship on the other side, a vessel sailing vessel and go to London. So they could be in London.

Well, the quickest was about two months, maybe three months. And now we’re seeing in the 21st century, the Bank of England can’t get its gold from London to New York. It’s taking two, two months.

It doesn’t make sense, does it? So I don’t think we’ve heard the last of this evolving short squeeze in physical gold. And I think the same thing is going to happen to physical silver. So back to the bank war.

Let’s start with the first bank war. And I’m going to recommend another book. The new viewers by now must be realizing that that I like books and I like reading.

Well, and I’m going to refer you to a lot of books that I think are interesting. So Andrew Jackson by H.W. Brands. And yes, we’re going to go through a chapter or a passage here about the Bank of the United States in the 1830s.

So what was the bank war? Well, according to Wikipedia, the bank war was a political struggle that developed over the issue of rechartering the Second Bank of the United States, BUS, during the presidency of Andrew Jackson, 1829 to 1837. The affair resulted in the shutdown of the bank and its replacement by state banks. The Second Bank of the United States was established as a private organization with a 20-year charter, having the exclusive right to conduct banking on a national scale.

The goal behind the BUS was to stabilize the American economy by establishing a uniform currency and strengthening the federal government. So there you go. This bank wouldn’t have been around if it wasn’t for the federal government.

So it wasn’t really independent, but it was private. It was exactly like the Federal Reserve now. It was established, of course, through a charter, the Federal Reserve System.

It was an act, so the charter doesn’t have to be renewed. But the concept is very similar. You have a private bank and you have the government giving it a monopoly, basically.

And don’t forget, the Bank of England was also created by a charter. In the case of the Bank of England, it was a royal charter, of course. So why are we talking about this? Well, the First Bank War back in the 1830s was between the guy who headed the Second Bank of the United States from a patrician family, if you want to call it, Nicholas Biddle from Philadelphia.

And it was a battle against the president of the United States, Andrew Jackson. And I think we are, or we could, I’m not saying it’s definite, but we could be seeing the beginning of a Second Bank War. And this time is going to be between Jerome Powell, J. Powell, the chairman of the Federal Reserve Board, and the president of the United States, Donald Trump.

And why do I say that? Well, prior to, I think, the inauguration, there was an FOMC meeting. It could have been after, I’m not sure, but that doesn’t really matter. But one of the reporters at the press conference asked J. Powell, could the president fire you? And he said, no.

And they asked another question in relation to that. And he said, no, he didn’t seem very amused. So, and a lot of people are wondering as well, why he cut rates so aggressively, right? In September, if the economy was doing so well.

Some people think it was a political move just before the election. And yesterday, though, was very interesting. And this is the reason I’m talking about this bank war and and a possible Second Bank War.

Well, got the headlines here. Trump interest rates. Telegraph says Trump calls for lower interest rates despite rise in inflation.

Trump says interest rates should be lowered to go hand in hand with his tariffs. Trump says more tariffs coming and calls for lower interest rates. And then half an hour or an hour later, we had the publication of the CPI numbers, which really measure prices.

And the CPI numbers, of course, are heavily doctored. Prices are probably rising a lot faster. And the number was expected to come out at 0.3% month on month and 2.9. But they actually came out at 0.5 and 3%.

And you can bet that the Trump administration knew what the number was going to be. I’m sure that they’re told like a few hours before by the Bureau of Labor Statistics what the numbers are going to be. So I think President Trump was aware of that.

I thought the comment about interest rates and the fact that CPI came a lot higher is going to start creating a problem for the chairman of the Federal Reserve. And of course, the excuse that central bankers have today is that they shouldn’t be influenced by government or by politicians or by political parties because money and banking are supposed to be independent and it has no affiliation to politics. But we know from the last few decades that when push comes to shove, the central bank will intervene through lower rates, money printing to help out the government.

And the thing is, just like the Bank of England and the Second Bank of the United States were given charters, the Federal Reserve was also an act of Congress. So they’re monopolies, central banks, and it’s impossible for them to be independent. The people who really benefit, as we know, are the bankers because that’s what they do.

The central banks, they’re there to bail out the private or commercial banks when they are in trouble. And they’re there to allow the commercial banks to take in the profits when they make money. And it’s the taxpayer and the general public, the real economy that gets hurt.

And it says here on Wikipedia about the First Bank War or the Bank War, Jacksonian Democrats cited instances of corruption and alleged that the BOS favored merchants and speculators at the expense of farmers and artisans, appropriated public money for risky private investments and interference in politics, and conferred economic privileges on a small group of stockholders and financial elites, thereby violating the principle of equal opportunity. Does that sound familiar? So the elites now are the 0.1% and look at how they’ve benefited since, oh wait, since the Fed printed trillions of dollars. It’s helped out.

Yeah, the speculators, for speculators, read hedge funds nowadays. So there’s the old saying that the more things change, the more they become the same. So what I like to do now is go through this passage here in Andrew Jackson’s biography by H.W. Brands, where we’ve got some comments here by Nicholas Biddle, who was the head of the Second Bank of the United States.

And it goes to show that leopards never change their spot. And the central bankers are saying the same thing today that they said back then. It says here, for the record, Biddle asserted that the bank was above politics.

Well, my question, Mr. Biddle, is if you’re above politics, why did you have to be created by a charter from the federal government? That’s political in itself. And here I quote, there is no one principle better understood by every officer in the bank than that he must abstain from politics, he declared. The course of the bank is very clear and straight on that point.

We believe that the prosperity of the bank and its usefulness to the country depend on its being entirely free from the control of the offices of the government, a control fatal to every bank, which it ever influenced in order to preserve that independence. Well, there’s that word again, central bank independence. It must never connect itself with any administration and never become a partisan of any set of politicians.

Biddle told a friend that the offices of the bank to a man adhere to his view. And we’ve seen a couple of days ago that Elon Musk was in the Oval Office with his son who’s called X. And he spoke about the fact that the Constitution only has three branches of government, the judicial, the legislative, and the executive. But he said the bureaucracy has become so powerful and so unaccountable that they have to do something about it.

And I agree. And I think the Federal Reserve System is the most harmful and most out of control bureaucracy there is. And they hide behind this veil of independence, even though they’re not really.

So I see some big trouble coming ahead, or like a second bank war. You’ve heard it here first. So it’s going to be Trump versus Powell, instead of Jackson versus Biddle.

That’s the way I see it. And if you think about all the corruption that has been exposed up until now, through what’s going on at USAID, it all leads to the Federal Reserve. And why is that? Well, because they control the money and the currency.

So if you really want to stop the corruption, you’ve got to cut the head of the snake, so to speak. And the snake is the Federal Reserve. So there you go.

With that, let’s quickly look at the markets this morning. It’s 8.33am London time. We had also the CPI numbers yesterday.

And they came out stronger than expected, of course. And gold and silver got hammered. So did the stock market.

But what was encouraging is that gold and silver came right back. Silver led the way, went back above 32, the spot price. And gold dropped to around $28.66 and closed a day above $2900.

So I thought that was very encouraging. Right now, we’ve got spot gold at $29.13, up nine bucks. Silver’s at $32.23, up two cents.

I think the key level for silver is $32.50. Keep an eye on that. The Dow futures is down $47. The Nasdaq 100 futures down $18.

S&P is down $12. We’re seeing the European currencies up a little bit today. The pound is up a third and so is the euro.

What else is going on here? High grade copper. How’s high grade copper doing? Yes, it’s down slightly, but it’s continued to go higher. We’re near some key resistance levels.

And I think that’s pointing to much higher commodity prices. And it’s also pointing to a higher cost of living. High grade copper is at $4.74. $4.80 is the key level on the upside.

And there’s talk that China could be coming out with another stimulus package from the Chinese government. The bond market didn’t fare very well yesterday. We saw the bond yields, treasury yields spike because of those CPI numbers.

Right now, the 10-year yield is down slightly, but it’s at $4.60. We got up to $4.66. Recently, we got below $4.50. The key level to watch here, I think, is $4.75. And if we break through there, we could see trouble in the markets because 5% is a level that creates a lot of trouble, not just for the markets, but for Jay Powell. And then you have President Trump saying that he needs to cut rates while yields are going higher. So it’s all getting really contradictory and interesting.

And with that, I’m going to wish you all a very good day. Take care. Bye.