The Federal Reserve recently surrendered in its inflation fight. But price inflation is nowhere near the 2% target. Why did the Fed raise the white flag prematurely?
One of the major reasons is debt.
The world is buried under record debt levels and the global economy can’t function in a high interest rate environment.
After the Federal Reserve effectively surrendered to inflation at its December meeting, projecting three rate cuts next year, New York Fed President John Williams tried to walk the surrender back. In his podcast, Peter Schiff analyzed Williams’ more hawkish comments and compared them to Powell’s dovish stance after the FOMC meeting.
Williams said, “We aren’t really talking about rate cuts right now,” and that it’s premature to expect rates to fall in the opening months of 2024.
Two weeks ago, Federal Reserve Chairman Jerome Powell said it would be “premature” to conclude that monetary policy is sufficiently restrictive. This week, the Fed indicated rate cuts are on tap for next year. What a difference two weeks makes! In this episode of the Friday Gold Wrap, host Mike Maharrey breaks down this week’s Fed meeting and the status of the inflation fight.
The Biden administration just ran the largest November budget deficit in history.
And it managed this feat even with a 9% increase in government receipts.
The Federal Reserve just surrendered to inflation.
Fed officials won’t call it a surrender. They’re claiming victory. But surrender is the effect of the policy trajectory laid out by the Federal Open Market Committee (FOMC) at its December meeting.
Why do virtually all the mainstream pundits think the Federal Reserve has won the inflation fight?
Maybe it’s just wishful thinking. They want the Fed to win so it can go back to what it does best – creating more inflation with artificially low interest rates and quantitative easing.
Regardless, most of the mainstream punditry hyped the November CPI report as more positive news on the inflation front. The CNBC headline reflected the consensus – inflation “slowed” last month.
Except it really didn’t.
In a recent interview with Forbes, economic commentator and historian Jim Grant warned that we haven’t fully felt the inevitable fallout from the “free money era.”
I think that the consequences of more or less 10 years of proverbially free money are going to play out in the credit markets.”
Peter Schiff recently appeared on the Claman Countdown with Creative Planning president Peter Mallouk to talk about the recent record high in gold and the trajectory of the markets over the next few months.
Mallouk is bullish on the stock market, but Schiff makes the case that this is gold’s day.
Imagine a bedroom. It looks clean and safe, but there is a monster under the bed that nobody notices. As host Mike Maharrey explains in this episode of the Friday Gold Wrap, that’s basically the condition of the US banking system right now. It appears “sound,” but a closer look reveals a financial crisis is still bubbling under the surface. He also talks about the recent run-up in the price of gold.
Unrealized losses on securities held by US banks exploded by 22% in the third quarter.
Of course, unrealized losses don’t really matter — until they do.
This is yet more evidence that the financial crisis that kicked off last March continues to bubble under the surface.
