We have argued that the Federal Reserve has no exit strategy from this extraordinary monetary policy. In fact, it never could extricate itself from the extraordinary monetary policy it launched during the Great Recession. Today, we’re merely witnessing the same policy on hyperdrive. And there is still no way out.
Low interest rates are a boon to borrowers. Thus the Federal Reserve’s quest to hold interest rates artificially low during the current economic crisis. We’re told easy money will bolster the economy as consumers and businesses take advantage of low rates and spend.
But if you’re trying to save money, this anything but a boon. In fact, it’s nearly impossible to save for retirement in the current interest rate environment. Today, your average Joe is forced to invest in increasingly riskier assets in order to generate enough money to retire on.
Gold and silver got hammered (along with stocks) this week as the dollar strengthened with a sudden bout of risk-off sentiment. Rising numbers of coronavirus cases have ignited fears of new economic restrictions and markets have fretted about the lack of additional stimulus. Gold is at a 2-month low. So, is it time to panic? On this episode of the Friday Gold Wrap podcast, host Mike Maharry tries to answer that question and looks at all that you have to believe in order to claim the gold bull run is dead.
Gold had another precipitous drop on Wednesday (Sept. 23), falling through the support level at $1,900 to a 2-month low. That has led some to ask – is the gold bull dead?
The concern is understandable but I think it’s too early to declare last rites. In order to believe the gold bull run is over, you have to believe the Federal Reserve is actually going to tighten monetary policy and the dollar is going to remain strong.
That seems rather unbelievable.
The Federal Reserve wrapped up another FOMC meeting this week. The central bank delivered pretty much what was expected. The easy money will continue to flow unabated. But it looks like what is expected is no longer enough. The addict wants even more of the monetary drug. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the Fed meeting and the market reaction.
If you go to McDonald’s, you expect to get a hamburger. If you go to KFC, you expect to get chicken. And if you go to the Federal Reserve, you expect to get easy money.
The Fed delivered exactly what you would expect at this month’s Federal Open Market Committee meeting that wrapped up Wednesday.
Last month, the Federal Reserve moved its inflation goalposts. Is it setting us up for a return to the inflation of the 1970s?
During a speech at Jackson Hole, Federal Reserve Chairman Jerome Powell announced new policy guidance for how it addresses price inflation. In the past, the central bank has targeted a 2% inflation rate as measured by CPI. Now it will shift to “average inflation targeting.” In practice, the Fed will allow the CPI to run “moderately” over 2% “for some time” to balance out periods where it runs under that level. In effect, the central bank now has an excuse to let inflation run hot.
New home sales blew away expectations in July, coming in at the highest level since 2006. A lot of people take this as a sign of a strengthening economy. Peter Schiff begs to differ. In his podcast, he argued that surging homes sales are actually a sign of a weak economy.
Single-family new home sales rose 14% between June and July to an annual rate of 901,000, according to Commerce Department data. Sales were up 36% on a yearly basis.
Gold is knocking on the door of its all-time record price. At this point, it’s not a matter of if gold will break its record but when. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the dynamics that are driving both gold and silver higher and explains why he thinks gold has a long way to run even after it breaks the record. He also highlights some more economic data that undermines the “quick recovery” narrative.
Jim Grant has long been skeptical of the mechanization of the Federal Reserve. He was warning about the distortions created in the markets and broader economy caused by the central bank’s monetary policy long before the monetary Hail Mary it threw up in response to the coronavirus pandemic.
Last month, Grant wrote an op-ed for the Wall Street Journal headlined, “Powell Has Become the Fed’s Dr. Feelgood,” and he recently appeared on Fox Business to talk more about how the Fed is further distorting an already distorted economy.
