The bond market is getting clobbered. Long-term interest rates are rising and that is putting significant pressure on gold. Peter Schiff talked about rising rates and the gold market in a recent podcast. He said the rise in long-term yields is a function of inflation and people seem to forget that inflation is good for gold.
On Wednesday, Federal Reserve Chairman Jerome Powell called for a “society-wide” commitment to reaching full employment, calling for “contributions from across government and the private sector.” He said getting people back to work would require “continued support from both near-term policy and longer-run investments.” He also dismissed concerns about debt saying the focus needs to be on the economy’s immediate needs. As Peter Schiff put it in his podcast, Powell handed the US Treasury a blank check.
The Joe Biden administration got underway last week. The newly inaugurated president issued a flurry of executive orders, many of them relating to the economy. In his podcast, Peter Schiff talked about the potential impact of these EOs. He said it looks like Americans voted for Joe Biden, but they ended up with Bernie Sanders.
Peter Schiff recently explained how the Federal Reserve has rigged the US Treasury market. Well, the European Central Bank has taken bond market manipulation to the next level.
According to a Bloomberg report, the ECB is buying bonds to control the yield spread between debt issued by various EU countries. As a result of this central bank mechanization, the spread between the yields on German and Italian bonds has remained “remarkably stable” despite the Italian government teetering on the verge of collapse.
The US government ran the biggest December deficit in history last month and there is no end in sight to the borrowing and spending. President Biden unveiled a new $1.9 trillion stimulus plan this week. So what? Why does it matter? Can’t this “rescue the economy?” Host Mike Maharrey talks about all of the spending and the money printing necessary to support it on this week’s Friday Gold Wrap podcast.
You may have noticed that the financial media has started talking about inflation. But by and large, it’s not a warning. It’s reassurance. Many analysts are dismissive of any concerns raised about inflationary pressure. They often claim the bond market isn’t signaling inflation. But as Peter Schiff points out in a clip from a recent podcast, the bond market is rigged.
Somewhat lost in the chaos of the DC protests was the fact that Democrats won both Georgia Senate runoff races. That effectively gives the Democrats control of both houses of Congress. In his podcast, Peter Schiff made the case that Congress is the real threat to America, not the protesters who broke into the Capitol building.
So far, the US has escaped negative interest rates as a matter of central bank policy. Back in May, many thought a Fed move to negative rates was a real possibility. Of course, much of the world has operated under negative rates as a matter of policy for years. The European Central Bank (ECB) launched negative rates in June 2014. The Bank of Japan (BOJ) introduced negative rates in January 2016. Both are still maintaining a negative rate policy today.
While the Fed has resisted the temptation of a negative rate policy so far, that doesn’t mean Americans have escaped the reality of below-zero real rates. In fact, the world is awash in negative-yielding debt.
A lot of pundits and analysts insist inflation isn’t a problem because the bond market isn’t signaling any inflation concerns. But in his podcast, Peter Schiff argues that you can’t rely on this bond market to tell you anything. The bond market is broken, thanks to the Federal Reserve. It’s rigged and it’s sending false signals.
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.
