From Birch Gold Group
It might be time to call NASA because the Federal Reserve has recently increased its balance sheet so fast that the resulting line chart could be mistaken for a monetary “moon shot.”
In an unprecedented move, the Fed’s balance sheet has “gone vertical,” shooting up to an astounding $4.67 trillion.
This official chart shows the vertical spike:
Notice also the Fed now has more assets on its balance sheet than any other time in history. Which brings up an important question…
Exactly what is the Fed adding a historic amount of liquidity for?
The Federal Reserve claims to be preventing a global recession, putting most of the blame on COVID-19. But as with most things related to the Fed, there is more to the story.
Wolf Richter thinks an “everything bubble” is inflating again:
It’s as if the QE unwind – that drop-off in assets from early 2018 through July 2019 – had never happened. And the steepness of the new spike shows just how panicked the Fed is about the sudden collapse of its super-bloated masterwork, the Everything Bubble that it had spent a decade inflating.
He goes further to highlight the fact that repo market liquidity is tightening again, spurring the Fed to react, as illustrated here:
Wolf concludes by highlighting the potential for the Fed to start buying up mortgage backed securities again. If that happens, it would represent yet another part of the “everything bubble” inflating.
So where does that leave the average retirement saver or investor?
The Potential Impact from Piles of Fed “Printed Money”
With all of this money from the Fed flying around, you have the potential for hyperinflation and stagflation, among other things.
For stagflation, you generally need three things: slow growth, high unemployment, and high inflation. With lockdowns across the country due to COVID-19, unemployment claims are on the rise and growth has likely slowed (although official GDP hasn’t been updated yet).
Official inflation has been on the rise since October 2019, currently sitting at 2.3% as of February, and likely to be even higher once the official rate is updated for March 2020. Of course, “real” inflation, using methodologies dropped since the 1990s, shows inflation closer to 6%.
If that “real inflation” were reported widely in the media, the markets may be even more uncertain than they are now.
Hyperinflation also remains a possibility. Rapidly rising inflation and a falling dollar may trigger the Fed to raise rates, just like they did in the 1980s.
The Fed’s balance sheet has jumped so high, so fast, it’s possible inflation will follow suit just based on that signal alone.
Who knows how high it will end up once the March update comes in? Fingers crossed that the U.S. doesn’t have a repeat of what happened in the 1980s.
Your Retirement Could Be Sitting on an Inflation “Powder Keg”
If the Fed and other factors trigger the wrong events with its “unlimited QE” approach to calming the markets, serious inflation (or stagflation) may happen again. On the chance that that happens, you’ll want to be prepared with assets that can protect your savings.
Holding assets such as physical gold and silver, which generally fare well during market turmoil and times of inflation, could help safeguard your retirement
With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold.
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If it’s true that the powers that be are starting to fill Cheyenne mountain, you can kiss that money goodbye. Maybe some surviving relative will make use of your gold stash years later.
Good point. I’m curious about them using a NORAD DUMB for a defense against this bug. If they’re using Cheyenne Mountain, then they’re filling all the other DUMB’s as well, I reckon.
They have all the paper needed to control the price of any asset on earth.
Wrong, Wrong, Wrong, This article proves how little people understand basic economics. Anyone who is expecting inflation to happen as a result of what is happening does not understand the situation.
While it is true that the government is increasing its balance sheet, and giving people money, what they are producing is a drop in the bucket to the money that is being destroyed.
Remember that almost all our money today is digital, not cash. It is created when someone uses credit, and it disappears if they default on their debt. If people use lots of credit and pay their bills, that is inflationary, but if they cut their credit purchases, and begin to default on the debts they owe, that is highly deflationary. And that is what is happening now, and will continue to happen going forward for the foreseeable future.
We are not going “back to normal” as you cannot shut off commerce world wide for 8 or 16 weeks and expect the impact not to be catastrophic.
One last thing, do you ever notice how the only people who are trying to sell the notion of hyperinflation is gold dealers? Now ask yourself if this makes any sense to you… They are telling you that hyperinflation is coming and soon you cash will be worthless, and gold will be worth several times its present value. And yet, they are willing to trade their gold for your cash. Does that make sense to you?
Currency is the medium of exchange. Would you expect them to sell gold for gold or maybe oranges?
You can’t find gold to buy.
Doesn’t an increasing demand signal an increasing price expectation?
It does in my book and 5000 years of use ain’t a bad track record. Expect gold to perform as it has historically, a safe store of increasing value in turbulent times.