Once again, the Fed is predicting a rate hike by the end of the year. The problem is they’re notoriously bad at predicting their own rate hikes.
The Fed’s Lackluster Success at Predicting Rate Hikes
At the start of 2016, Fed members had predicted more rate hikes than we’ve experience so far. That’s not a surprise to anyone who has followed the Fed for any period of time. Recently, Business Insider posted in-depth dot graph plotting the Fed’s missed marks when predicting its own hikes over the past three years.
As one of the largest markets for gold, India’s cultural and social changes are important influences on the precious metal’s price. The nation of almost 1.3 billion people has a strong relationship with gold, which is interwoven in marriage ceremonies and cultural rites. Just last month, high prices were driving many citizens to trade in their gold jewelry while gold bazaars and markets were seeing a sharp uptick in activity. Now, according to a Business Insider article, a healthy monsoon season, abundant crops, and lower prices are sending many farmers back to the gold market to buy.
In a recent episode of Ron Paul’s Liberty Report, the former presidential candidate and Libertarian icon examines the future of digital currency. Paul and co-host Daniel McAdams talk with NYU Law Fellow and digital currency expert Max Raskin about how a future form of US digital money might give the Federal Reserve even more control over monetary policy than it enjoys today.
Alasdair Macleod has over 40 years’ experience in fund management, corporate finance and investment strategy. He believes government monetary policies are the biggest threat to our financial savings and independence. As head of Research at Goldmoney, Alasdair helps everyday consumers understand the benefits of using gold as both money and a store of value.
We are all too aware of monetary policy and its objectives of targeting both moderate inflation and full employment at the same time. We are of course talking about price inflation, monetary inflation being the means of achieving the objective.
Central bankers don’t seem to understand that these objectives are incompatible, and here’s why. When you expand the quantity of money or credit, you debase the savings and wages of everyone, with two general exceptions. If the Fed expands the quantity of cash, or narrow money, the banks benefit, and in all likelihood they pass this benefit on to the government by spending it on new government debt. If the banks expand the quantity of bank credit, they benefit their favorite customers, who are usually big business. To believe otherwise is to subscribe to a law of financial perpetual motion, which is simply impossible.
In his latest podcast, Peter reports on the week’s economic numbers and takes the popular media to task for helping Hillary Clinton secure the presidency. Biased reports are showing Obama as a “deficit-reducing miracle worker,” while the debt-to-GDP has never been higher under his presidency.
“The media is constantly going to try to redefine a failed presidency as a success. One of the reasons they want to do that right now is they want that ‘success’ to rub off on Hilary Clinton … The media doesn’t even want to talk about the economy any more. If this election was about the economy, Trump would win. The only chance they have is to make the election about something else.”
That “something else,” of course, is Trump’s salacious comments and the sudden sexual harassment accusations that are coming out of the woodwork.
Despite the recent slump in gold prices, many influential analysts like Raoul Pal and firms like UBS are predicting a strong showing for gold in the next 12 months. Their beliefs are based on strong indicators of a looming recession, negative interest rates, and a downshift in global trade.
Full-time work is being replaced by multiple part-time jobs for Americans, and many indicators are flashing early warning signs for an imminent recession. Learn more in this week’s Fed Up Friday.
Part-Time Jobs Soar, Indicating Most Multiple Jobholders Since 2008
In numbers not seen since the financial crisis of August 2008, the number of multiple jobholders in the U.S. increased to nearly 8 million this past month. Additionally, the number of part-time jobs added was close to 500,000.This data must be taken into account when referencing “job growth” numbers that the Fed highlights as good data to inform their decisions. When someone who used to have a single, stable job is now working two different roles just to make ends meet, that isn’t a healthy economy. Unfortunately, it doubles the amount of “jobs” we added to the workforce, but they aren’t the jobs we want to see.
Late last week the Non-Farm Payroll Report was released. Peter Schiff laid out the details of the official scorecard on U.S. job creation and unemployment in his latest podcast. The big story of the reported “employment gains” is that they lump full- and part-time jobs together. They aren’t taking into account that when someone loses a full-time position in a field like manufacturing, they often have to get two, maybe even three part-time jobs to fill the financial void left over from a layoff.
As Peter Schiff explains, the quality of jobs added is more important than the gross number of jobs added. And by all accounts, the September report is bad news. Peter goes on to discuss a recent CNBC interview with Alan Greenspan, where he talked about the current stagflationary environment of the U.S. with slow economic growth and elevated inflation. That is the best possible environment for investing in gold and silver, and it’s only a matter of time before others wake up to the fact that Greenspan is hitting the nail on the head.
The basic definition of an interest rate is simply the cost of borrowing money. It’s the cost associated with acquiring credit, whether buying a car, getting a mortgage, or taking a vacation. We encounter interest rates every time we make a monthly credit card or student loan payment. Interest and interest rates are a major part of daily life, yet many people don’t have a good understanding of the most critical types of interest or how their rates are set. Broadening our understanding even a little can help empower us to make more informed decisions, whether at the bank or at the ballot box.
In a recent article on the next looming recession, Peter Schiff explains how current monetary policy has come to a crossroads. With respect to interest rates, there now seems to be two entrenched camps: raise or don’t raise. Unfortunately, they’re both wrong, mainly because they’re beginning with the wrong premise: that the economy can somehow avoid the painful process of market correction that raising rates would inevitably bring. Peter explains:
“The real choice is not between recession now or recession later. It’s between a massive recession now, or an even more devastating one later … Now is the time to bite the bullet, endure the pain, and allow the wound to actually heal.”
