Four headlines all in a row on the Drudge Report one day last week tell the whole story of US fiscal and monetary policy today. It is an alarming line-up that will have informed people moving to profit and protect themselves with gold and silver now!
INFLATION 30 YEAR HIGH…
FED KEEPS PUMPING…
STOCKS HIT MORE RECORDS…
DEBT NEARS $29 TRILLION…
Let’s take these headlines one by one:
The core personal consumption expenditure price index is the metric that the Federal Reserve prefers to use in its policy decisions. For July it showed an increase of 3.6 percent over the prior July. It’s the biggest increase in 30 years!
If you exclude increases in food and energy, the index rose 4.2% year over year.
For the same twelve-month period, through July, the more commonly followed CPI was up 5.4 percent. The three-month CPI annualized rate, after an 0.6 percent increase in May, 0.9 percent increase in June, and July’s 0.5 percent increase, is 8.1 percent.
The headline has it right. Inflation is high.
Quantitative Easing is a euphemism for the massive money-pumping that began with the bursting of the housing and mortgage bubble in 2008. It continues today with the Fed printing $120 billion a month. That’s $1.4 trillion a year in made-up money.
The story refers to a speech by Powell intended for an audience of central bankers in which he shot down any expectations that the Fed would halt QE. Characteristically of Fed chairmen, Powell played fast and loose with reality, suggesting that even when it slows down its money-printing, perhaps later this year, it doesn’t intend to raise interest rates.
Yet money-printing is precisely how the Fed suppresses rates. The headline has it right. The Fed doesn’t want rates to rise, so it will keep pumping.
This CNBC story, from last Friday (8/27/21), reported that “the Dow Jones Industrial Average gained 242.68 points, or 0.6 percent to 35,455.80. The S&P 500 rose 0.8 percent to hit a new high and closed at 4,509.37. The Nasdaq Composite added 1.2 percent, also hitting a new record during the session, closing at 15,129.50.
Wall Street knows well that stock averages are floating on a sea of Fed money printing. That is why it threatens another “taper tantrum” a sharp sell-off if the Fed allows interest rates to rise.
But at some point interest rates rise despite the Fed’s efforts – or more precisely because of the Fed’s efforts to hold them down by printing more money. Famed investor Mark Mobius says to expect currency devaluations next year because of all the central bank money printing. His advice is for investors to have ten percent of their assets in gold, physical gold, not paper gold substitutes like ETFs.
This link takes you to the national debt clock which shows the national debt at $28.7 trillion and climbing fast.
The Washington uniparty has much bigger debt numbers in our near future, with massive unfunded spending measures advancing at every turn.
However, the headline is not quite complete. Follow the link to the national debt clock and you will see that unfunded US liabilities, the portion of the debt that is off the books, like Medicare and Social Security liabilities, are a staggering $156 trillion dollars.
The four stories paint an accurate picture of the US today: Inflation is high, ultimately robbing your dollar savings and dollar investments of purchasing power. This happens because Washington spends money it doesn’t have, the Fed prints dollars to help the Treasury fund the debt, stovepiping the money first to Wall Street cronies. Meanwhile the debt reflects out insolvency along the way. It’s a vicious circle. The best way to avoid the dizzying madness is to step out of the game by converting ill-fated dollars to gold and silver.