“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.”
~ John Maynard Keynes
November 7, 2025 — Protestant firebrand and political activist Hugh Latimer must have known he was risking his life when he stepped into the pulpit at St. Paul’s Cross on January 12, 1549.
His sermon that Sunday morning was hardly religious in nature. Rather, Latimer publicly expressed the view — the deep, deep frustration — that nearly all Englishmen were feeling at the time, but everyone was too afraid to say out loud.
Inflation was killing them. And it was the government’s fault.
It started about seven years before, in 1542. England went to war against both Scotland and France — AT THE SAME TIME. War is always expensive, and it’s especially debilitating when you’re fighting simultaneous conflicts to your north and south.
War costs quickly mounted, and the English government began paying for it by debasing the currency. Two years into the wars, by 1544, silver content in their coins had plummeted by about a third. Two years later, by another 50%.
At peak, when Latimer gave his famous sermon, silver content had fallen 90% in just seven years. And as a result, prices across England were skyrocketing.
Latimer was witty and eloquent in the finest English tradition; he quipped at one point that “the King’s coin is become like the King’s faith — clipped and counterfeit.” And later on, “the debasing of the coin is the debasing of the realm…”
Latimer believed the debasement of the currency to be a moral issue — even a sinful act — because it was essentially theft of commoner’s purchasing power.
He spoke to thousands of people that cold day in January. But his words went far beyond the congregation; his sermon was published and widely circulated, prompting angry Englishmen across the country to form rebel groups and demand change.
Latimer was arrested and charged for “stirring the people,” imprisoned in the Tower of London and ultimately put to death. His final words were “we shall this day light such a candle, by God’s grace, in England, as I trust shall never be put out.”
Writing in his own journal in 1551, King Edward VI himself admitted that his government was wrong.
“The debasement of the coin was the cause of the dearth,” wrote the King — with dearth in that context referring to soaring food prices. He knew his government caused inflation, and inflation caused the social unrest. Latimer was an innocent man who had the courage to say what everyone else was feeling.
Both of these are sadly common trends in history; governments often persecute those whose only crime is telling the truth. And second, governments will invariably screw up, create inflation, and cause severe devastation in people’s lives.
I’ll focus on the second topic today given that the most recent inflation numbers in the U.S. were announced a few days ago.
And, no surprise, inflation is ticking up and moving in the wrong direction. Based on the September month-over-month numbers, inflation is an annualized 3.6%.
Bizarrely, the Fed has already begun lowering interest rates and is widely expected to cut further in the coming months… which will most likely make inflation worse.
Far more important is that Fed officials are signaling that they’re about to end their quantitative tightening earlier than originally planned.
This is crucial. During the pandemic, the Fed created $5+ trillion in new money.
Poof.
It’s the equivalent of England debasing its currency in the 1540s… and all that new money triggered all the inflation we’ve experienced.
Quantitative tightening is the reverse of that process; in addition to raising rates (starting in 2022), the Fed also began reducing the money supply and draining some of that money out of the financial system.
At this point, they’ve removed about $2 trillion out of the $5 trillion that they printed. And the original plan was to keep going and reduce their balance sheet.
But that seems to be no longer happening. So stopping the quantitative tightening, combined with interest rate cuts, will really invite a LOT more inflation.
And all of this is happening just as the labor market is beginning to falter. White collar jobs in particular are being slashed at an astonishing pace.
There’s a term for this — one that economists don’t like to use very much. But it’s called stagflation — a shrinking economy combined with higher inflation.
America has been here before– most recently in the 1970s.
The U.S. economy was in a tailspin; unemployment and inflation BOTH surged, resulting in an almost entire decade of economic misery. But there were safe havens.
Gold was an obvious safe haven. As the U.S. economy stagnated and retail prices rose, gold prices exploded, rising more than 20x over the next ten years. The dollar, meanwhile, lost roughly 75% of its purchasing power.
We’re seeing similar conditions today, from the inflation data to the gargantuan U.S. national debt. And if history is any guide, this isn’t a trend that reverses easily. The underlying driver — loss of confidence in U.S. fiscal policy and the long-term value of the dollar — shows no sign of abating.
This is why we’ve written so much about gold over the past few years. And, despite its recent pullback, gold remains an incredibly sensible long-term investment.
But there are other real assets to consider as well.
Real assets in general tend to hold their value during inflationary periods — because they’re not just paper promises. They’re tangible. They’re productive. They’re the raw inputs the economy is actually built on.
One of the most obvious opportunities right now — possibly the most mispriced sector in the entire market — is energy.
The world does not exist without energy. Full stop. People have been fed a ridiculous lie that oil is going to disappear and we’re all going to drive solar-powered EVs and Exxon is going to go out of business.
What total BS. But because of this myth, many oil companies are absurdly cheap. Meanwhile, oilfield services businesses have been practically left for dead.
Then there’s natural gas — which (especially in the U.S.) remains THE cheapest form of energy on the planet — cheaper than coal, oil, and in some real-world scenarios, even cheaper than nuclear. And it’s even pretty clean.
But natural gas producers too have traded at fire-sale valuations.
We’ve been clear that the gold story is not over by a long shot.
But in our investment research, we are starting to turn to other sectors that are still at the bottom of their cycles — but won’t stay that way for long the way inflation is heating up again.
The story of inflation is as old as the story of civilization itself. It’s inevitable.
And we’re seeing some pretty obvious warning signs on the horizon.
But there are some compelling safe havens out there which have almost never been cheaper. They’re worth considering.
To your freedom,
James Hickman
Schiff Sovereign LLC & Grey Swan Investment Fraternity
P.S. from Addison: James’ essay was originally published as Stagflation — The Fed Asleep At The Wheel on the Schiff Sovereign website.
In yesterday’s Grey Swan Live! chat, Harry Dent raved about AI — a massive life- and economy-altering technology — while also admitting there’s an AI stock market bubble ready to burst.
“Stock market crashes and economic recessions,” Dent exclaimed, “are a good thing!”
As usual, it’s what the government does to fight them that causes problems in people’s lives. To understand Harry’s cold, hard point of view, watch the replay here:
If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.
