The Inflation Saga Continues…
Here we go again.
Like trudging toward a financial mirage across an economic desert…
With every step the Fed takes toward solving inflation, the solution seems to move further away.
For a while, the media narrative was all about a “hard landing” – where the Fed tightens so much a recession happens. Then, it was all about a possible “soft landing” – where inflation showed signs of slowing. And now, after inflation rose 6.4% in January, the media buzz is about “No landing” – where the economy doesn’t shrink and inflation comes back after an initial decline.
But that doesn’t seem to match what experts and analysts are saying:
The Economist says, “Lots of investors think inflation is under control. Not so fast.”
Barron’s says, “Inflation isn’t conquered yet.”
Forbes Advisor says, “Record levels of inflation continue to batter consumers.”
So, what’s the problem here? Why is the Fed caught in such a conundrum?
The answer seems clear:
The people who are trying to solve the problem… are part of the problem.
Well, for a long time, the Fed’s money printing flooded the markets. The economy boomed. Portfolios ballooned. Home values soared. Bank accounts grew. And some analysts called it asset value inflation. Meaning, asset prices were rising way above and beyond the growth of the economy, because the printed money must end up someplace.
Then, the pandemic hit.
People were out of work…
The money printing scheme went into overdrive…
And inflation swept the nation.
Now, the federal government is stuck in a vicious cycle of borrowing and printing money to service its unrepayable $31.5 TRILLION debt. And that debt is growing faster than the economy.
Furthermore, when the Fed hikes interest rates, borrowing money becomes more expensive. And this can, in turn, stall economic growth. But the government can’t afford to have high unemployment because that means more entitlement payments and less tax revenue to service its debt. Which means the Fed must print more money to stimulate the economy, which fuels inflation.
What can they do?
Will the Fed take clues from the past to solve the problem now?
After all, America faced a similar situation during the 1970s’ inflation…
Back then Fed Chief Paul Volcker raised interest rates to shocking levels of over 20% and it “worked” … but it also produced economic devastation. And now, James Bullard, the President of the Federal Reserve Bank of St. Louis says they “didn’t act strongly enough to keep inflation under control and The Saga of Inflation fighting went on for about 13 or 14 years … [T]hey swore we would never allow this to happen again [… and] if we can’t get this problem under control soon… we risk a replay of the 1970s…”
In other words, inflation may persist, and the Fed may have to take extreme measures to bring it down.
But even if we experience a massive, sudden reduction in inflation…
Do you believe the federal government will ever stop borrowing and printing?
Do you believe the multi-trillion-dollar federal debt can ever be repaid?
Because, if they do tame inflation with higher interest rates…
And they continue to borrow and print as it seems they must…
We’re essentially back where we started.
The consequences may be dire for unprepared Americans. And there may be nothing anyone can do to stop it. Because, as Ludwig von Mises, one of the greatest economists of the twentieth century, said:
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
So, what can you do now to help secure your long-term financial future?
As they say, success leaves clues. And one clue to consider right now is:
Follow the Smart Money.
As you may recall, global central banks are gobbling up the world’s gold supplies in record amounts at a record pace. And billionaire investor John Paulson notes what this may mean for investors long-term:
“There has been a significant increase in demand from central banks to replace dollars with gold, and we’re just at the beginning of that trend. Gold will go up and the dollar will go down, so you’d be better off keeping your investment reserves in gold at this point.”
Lisa Shalett, Chief Investment Officer, Wealth Management, at Morgan Stanley, agrees and says, “Our view is that the weight of monetary supply, expansion, is going to ultimately be debasing to the dollar, and the Fed commitments, which … make the case for gold pretty sturdy.”
And if you agree with their conclusions, consider this:
If the economy becomes more unstable, investors will face more risk. And when savvy investors face more risk, they tend to run away from low-liquidity, high-risk assets — like stocks, bonds, treasury bills and the US dollar. And they shift funds into lower-risk, highly liquid assets like gold.
With that in mind…
Think of the value of gold if more investible money floods out of those risky market positions into gold.
As mentioned in earlier posts, experts and analysts predict we may soon see gold soar to record heights.
The bottom line is:
The looming global monetary crisis and possible economic turmoil of continued inflation…
And the borrowing and printing cycles…
Probably won’t come to a sudden, miraculous halt.
The challenges are piling up with no working solutions yet. And we cannot control what the Fed or federal government may or may not do with our money in the future.
This is why, more than ever, I’m staying laser-focused on what I can control.
And I’m aligned with the thousands of Americans who believe the writing on the wall is spelled out in capital letters: OWN GOLD NOW.
If you’re interested in discovering more about how gold may help you secure your long-term financial future in this uncertain economic environment, you can get a FREE copy of our Gold Information Kit here. Or dial toll-free 888-529-0399 to speak with a Gold Specialist about your needs and goals now.