It was good to see a no-nonsense headline in the Financial Times a few days ago. It read, “The Fed owes the American people some plain-speaking.”
For its part, the Fed disagrees.
Asked at his May news conference if he thinks the Fed has a credibility problem, Chairman Jerome Powell responded with a quick, “No, I don’t.”
But another columnist and widely followed bond strategist, Mohamed El-Erian, wrote in a Bloomberg piece that the Fed could start by explaining why its inflation forecasts have been so wrong for so long.
The Fed’s misunderstanding of the inflation crisis is no small matter. After all, the U.S. central bank’s dual mandate specifically charges it with maintaining price stability. But battalions of Fed economists and boards of bureaucrats missed it entirely, leaving most Americans gobsmacked by the fastest price increases in their lifetimes.
Nevertheless, the problems with the Fed are not limited to its having engineered the wasting away of the dollar’s purchasing power, something that appears to have been an occupational priority at the Fed for most of a century.
There is also the small matter of the Fed’s insider trading scandal. Wall Steet on Parade says it has done “permanent damage” to the Fed’s reputation and to Powell:
Numerous Fed officials have been implicated, including Powell himself. But the most egregious trading conduct, that of Robert Kaplan, the former President of the Dallas Fed, appears to be undergoing a coverup by the Fed. The Fed will not release the dates of Kaplan’s “over $1 million” in stock trades and S&P 500 futures, despite the fact that Kaplan was legally required to provide those dates for the five years he served as President of the Dallas Fed.
However, there’s still another elephant in the Fed’s conference room.
The Financial Times notes that with “a dozen years of ultra-loose policy,” the Fed has conditioned the markets and the people to believe that it is a bottomless well of free money that will rescue them from any market correction.
Yet, if the Fed has now made the profound policy pivot that it says, then nothing will be done about the global bubbles – in stocks, bonds, and real estate – that are popping.
Still, Powell offers that “we have a good chance of having a soft or softish landing.”
Softish? That one will go down in Fed-speak with inflation being “transitory.” Softish is a world that simply doesn’t apply to the popping of the biggest bubbles of all time. There was nothing softish about the dot-com bubble popping or the housing bubble. And when the biggest bubbles of all time all pop at once, the authorities “will not be able to prevent, sooner or later, the asset prices coming back down.” So warned bubble expert Jeremy Grantham on the PBS series Frontline a year ago. “We are playing with fire,” he said.
Between a $300 trillion mountain of global debt, highly leveraged speculation, a spaghetti-plate of tangled derivatives, and quite frantic central bank money printing, there’s no place to turn for a bail-out.
What can you do? How can you avoid being collateral damage? There is really only one alternative means of wealth preservation.
When plain-speaking is not to be found, and monetary confusion, excess, and recklessness abound, gold shines brighter than ever. If you haven’t taken steps to protect yourself, your family, and your future with gold – time-tested in monetary crises like these all over the world – we recommend you do so at once.
Remember, the bigger the bubble, the bigger the bust. The $4.6 trillion in Fed money printing in the last two years has created the biggest bubble of all.
Now the reckoning has begun.
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The opinions, beliefs, and viewpoints expressed in this article do not necessarily reflect the opinions, beliefs, and viewpoints of Red Rock Secured LLC or the official policies of Red Rock Secured LLC. Red Rock Secured LLC is not a financial advisor, is not licensed to provide investment advice and neither provides investment nor financial advice. Red Rock is a product specialist that can help evaluate your precious metals purchase options.