The Federal Reserve added nearly $300 billion to its balance sheet in a single week as it kicked off its loan bailout program for banks.
In effect, the Fed loaned troubled banks $300 billion of new money that was created out of thin air.
In other words, we got $300 billion in inflation in a single week.
As the old saying goes, if it looks like a duck, walks like a duck, and quacks like a duck, it’s probably a duck.
Well, if it looks like a bailout, walks like a bailout, and talks like a bailout, it’s probably a bailout.
The annual rise in the Consumer Price Index (CPI) for February came in at 6%. This was down from the 6.4% annual increase charted in January. The eighth straight monthly decline in CPI seems to have restored faith that the Federal Reserve is winning the inflation fight. But everybody should probably stop and remember that the target is 2%.
Six percent is a lot bigger than 2%.
The failure of Silicon Valley Bank and Signature Bank reminds us of a very important truth — if you can’t hold it in your hand, you don’t really own it.
That’s why it’s wise to hold at least some of your wealth in hard assets like gold and silver that are in your direct possession or at least stored in a secure, allocated, segregated, and insured storage facility.
In the wake of two bank failures, the Federal Reserve and the US Treasury announced a bank bailout program.
Last week, Silicon Valley Bank was shuttered by federal authorities after the bank suffered significant losses selling bonds in order to raise capital. When that news hit, depositors rushed to pull funds from the bank, making it functionally insolvent. Then over the weekend, federal authorities shut down Signature Bank.
Federal Reserve Chairman Jerome Powell performed some “open mouth operations” on Capitol Hill Tuesday.
Powell talked and the markets freaked out.
Violent protests in Nigeria reveal that getting average people to embrace central bank digital currencies (CBDCs) might be more difficult than government officials would like.
Nigerians recently took to the streets to protest a cash shortage caused by government policies adopted in order to push the country into the adoption of its central bank digital currency (CBDC).
Protesters attacked bank ATMs and blocked streets, and demonstrations turned violent in some cities.
The Federal Reserve is bleeding money and losses are mounting.
So, what does this mean? Is the central bank in danger of going under?
Hardly.
In fact, losing money isn’t a problem for the Fed at all. But it is a big problem for the US government.
Retail sales surged in January, creating the impression that the economy is humming along nicely. After all, there can’t be a problem if consumers are out there consuming, right?
But a lot of people are ignoring a key question: how are people paying for this shopping spree?
One of the characteristics of gold is that it preserves wealth in a world of constantly devaluing fiat currency.
Put another way, it preserves your purchasing power over time.
