The United Nations Conference on Trade and Development (UNCTAD) got it half right.
The UN agency warned that there is a high risk of a global recession due to central banks tightening monetary policy to fight inflation. But the solutions offered reveal that the UNCTAD has no idea what causes inflation.
Last week, the Bank of England suddenly pivoted. It gave up its inflation fight to rescue its pension funds and bond market. What exactly happened? And what does it tell us about the Federal Reserve’s inflation fight? Peter Schiff explained it all on his podcast.
With a hurricane barreling toward his home, Friday Gold Wrap podcast host Mike Maharrey called an audible and recorded this week’s show ahead of time. And since the hurricane is in the news, as well as top-of-mind for his family, he uses it as a jumping-off point to talk about some economics including the concept of “price gouging” and the “broken window fallacy. He also touches on dollar strength and how it’s impacting the gold and silver markets.
This is starting to look a lot like the popping of the dot-com bubble with one big difference — inflation.
Beginning in mid-June, we saw a significant bear market rally in stocks. But the recent declines have wiped out those gains and more. For instance, the Dow jumped 14% during the 2-month rally. By the close on Friday, Sept. 23, it was once again down 20% from its all-time high. That same day, the NASDAQ closed just 2% off its June low after a 23% rally.
Given historically high inflation, why haven’t we seen a big rally in gold and silver?
There are a number of factors that have weighed on precious metals, but as the World Gold Council points out, it’s important to put gold and silver’s recent price movements in a broader perspective.
In fact, gold has been one of the better-performing asset classes in 2022.
Last week the Fed raised interest rates another 75 basis points and continued to insist it was fully committed to doing whatever it takes to bring inflation back down to 2%. In his podcast, Peter argued that Powell still thinks he can pull off the impossible.
He can’t.
Even as the August inflation data was coming out higher than expected, President Joe Biden was bragging about his “Inflation Reduction Act.” Peter Schiff appeared on NewsMax and argued that the president is putting Americans at risk just so he can improve his image as we approach election time.
The September Federal Reserve meeting wrapped up this week with another 75 basis point rate hike. And Fed Chairman Jerome Powell admitted that there is going to be some pain as the central bank continues to fight inflation. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey reacts to the meeting and the Fed’s messaging. He said he thinks Powell & Co. are drastically understanding the coming pain.
During his post- FOMC meeting press conference, Federal Reserve Chairman Jerome Powell said, “Hope for the best; plan for the worst.”
I think he meant, “Live in hope; die in despair.”
The Atlanta Fed has lowered its GDP estimate for the third quarter to 0.3%, and the trend is downward. That means the economy is teetering on the verge of another quarter of negative GDP growth. Would that be enough to raise recession alarms?
