Fed Up Friday: Oct. 22 – 28

Despite today’s GDP numbers and many expecting a rate hike in December, get ready for years of continued low interest rates for a struggling economy. A rate hike this year will simply be “too little, too late” for our weakest economy since 2008. Learn more about how the Fed factors into all of this in this week’s Fed Up Friday.

Yellen’s Desire to Run up Inflation could cause “Civil War” at Fed

There are an increasing number of hawks at the Fed who are at odds with Yellen’s monthly plans to continuing the policy of waiting for “good” data. Many see last September’s meeting as being “the straw before the straw” that breaks the camel’s back. There seems to be a growing division between the two camps, with more hawkish members putting up a tougher fight in December.

As Peter said in his latest podcast, a December rate increase will “too little too late” to negatively affect the gold market. “The Fed is going to deliver far less than it promised when it comes to rate hikes.”

Bullard Sees Years of Low Rates on the Horizon, Despite December Hike

Currently, the Fed interest rates are sitting very close to zero. James Bullard of the St. Louis Reserve Bank doesn’t see that changing for at least the next two to three years, even with a hike likely for December. His comments this week suggest the Fed’s move will be a one and done event, with likely no substantive changes until 2019.

One reason the Fed will likely move into 2017 without a long term plan is they are in an impossible situation: higher interest rates make servicing the national debt impossible. Even if we’re currently in a type of “recovery”, it’s likely to be a short-lived one.

U.S. in Weakest Economic Trend since 2008, According to Richmond Fed

The latest Richmond Fed business survey, which is designed to measure how regional businesses experience economic changes, is showing the largest downward trend since the 2008 collapse. The survey results showed a combination of dropping inventory, declining average workweek and plunging customer orders.

James Rickards: “You Want to Own Gold Now, before the Next Crisis Strikes”

James Rickards took some time to examine the legacy that will be left by the current iteration of the U.S. Federal Reserve. Unsurprisingly, it wasn’t a history to be admired. Rickards points to the flawed practice of money printing, bond purchasing and quantitative easing in an attempt to grow inflation to 2%. Instead of inflating commodities and consumer goods, the Fed has only succeeded in creating a stock market bubble. He puts it like this:

In other words, we have not had much consumer price inflation, but we have had huge asset price inflation. The printed money has to go somewhere. Instead of chasing goods, investors have been chasing yield.

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