The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
The Federal Reserve took a hawkish stance at its latest Open Market Committee meeting, announcing plans to begin unwinding its balance sheet next month. Fed chair Janet Yellen also indicated she plans to raise interest rates one more time this year.
Here’s the question: Is this a viable path forward, or is the central bank playing a game of monetary chicken?
Toys R Us filed for bankruptcy earlier this week, a wicked head-shot to a retail sector that’s been reeling for months.
The TRU filing ranks as the second-largest US retail bankruptcy ever, according to S&P Global Market Intelligence.
Toys R Us had $6.6 billion in assets at the time of filing. Only Kmart was bigger. It had $16.3 billion in assets when it went bankrupt in 2002. Crushing debt pulled the giant toy seller under. According to a Bloomberg report, the company has piled up more than $5 billion in debt. Toys R Us reportedly pays more than $400 million a year on debt service alone.
The company says it plans to continue operating and secured a$3.1 billion operating loan to stabilize operations.
The Federal Reserve Open Market Committee will meet this week. There is virtually no expectation of a rate hike this time around, but there is widespread anticipation that the Fed will outline its strategy for shrinking its massive balance sheet.
In his most recent podcast, Peter Schiff made a pretty good case that the Fed won’t be able to shrink the balance sheet at all. I fact, he says the central bank will end up having to expand the balance sheet even more when it’s all said and done. The deteriorating economy is one factor, but an even bigger problem for the Fed is the exploding national debt.
Last week, the Texas House unanimously passed a bill that would facilitate the establishment and operation of the Texas Bullion Depository; helping to undermine the Federal Reserve’s monopoly on money.
The creation of a state gold depository in Texas represents a power shift away from the federal government to the state, and it provides a blueprint that could ultimately end the Fed. The facility will not only provide a secure place for individuals, business, cities, counties, government agencies, and even other countries to to store gold and other precious metals, the law also creates a mechanism to facilitate the everyday use of gold and silver in business transactions. In short, a person will be able to deposit gold or silver – and pay other people through electronic means or checks – in sound money.
True Economics called it “the scariest chart in the world.”
That may be a little bit of hyperbole, but a chart showing declining average rates of growth during each economic expansionary period since the 1950s is certainly cause for concern.
