Jun 9, 2021
The Fed’s efforts to create inflation have succeeded beyond their wildest expectations. They’ve created $4 trillion and their balance sheet is $8 trillion. We had tremendous amounts of helicopter money raising stock prices and home prices. Enhanced unemployment, mortgage and rent forebearance, student loan deferrment are all coming to an end. That’s the fiscal cliff. The monetary cliff is already happening. Tapering will resume with the end of bond purchases, probably starting in October. Imagine when the consumer starts having to actually pay their mortgages, credit card bills, etc. The economy is reopening, leisure and hospitality will boom. People got more money for staying home than they would have gotten were they working. It’s all coming to an end in 2022.
Michael is a self-proclaimed gold bug, inflationista and a dollar bear. Major inflationnary booms followed by deflationary busts. There’s no taking away the punch bowl. What is the Fed going to do now? You better have a long-term inflation strategy. We’re at peak growth and peak inflation now. But that will change shortly. Odds are good for a major credit crisis and repo meltdown is coming. You can’t trust the Fed.