Some participates expressed concern that the abrupt removal of policy accommodation would cause financial conditions to tighten unnecessarily.–Observation from the Federal Reserve minutes today
The Fed has been kicking the proverbial can down the road for decades via forcing interest rates lower and printing money out of thin air. As a result, investors with access to the stock market, real estate market and bond market have made fortunes. However, upon closer look, one would have to see that much of this prosperity has been built on a house of sand, and that the next downturn will be far more painful than the Great Recession of just a dozen years ago.
Why? Because the level of debt and amount of financial derivatives at play is now exponentially greater.
The Fed has two choices: default on the debt (which would be a disaster of epic proportions) or let inflation run and manage it the best they can. So clearly, higher inflation is not going away anytime soon. Interest rates will continue to rise and it’s only a matter of time before the financial markets buckle under.
I know change is difficult for most, but if you don’t see the handwriting on the wall and adapt accordingly, you most likely are going to experience a world of hurt over the years to come like never felt before.
Hyperinflation – Part Two
by Bill Holter
Precious metals expert and financial writer Bill Holter predicted at the end of last year that in the first half of 2022, all the false narratives would be exposed. That includes confidence and credibility in the Federal Reserve and, thus, the dollar. The Fed just had a so-called “emergency meeting” on Valentine’s Day because of spiking inflation. The meeting produced no action taken by the Fed. It did nothing. Holter says things are going to get bad—really bad. It will be unlike anything anyone has seen before in modern history. Holter explains, “We absolutely are in a global bankruptcy. Maybe we have a month, maybe we have even less than that. If they do nothing, then, basically, they have lost credibility. They have thrown in the towel, and they are telling the markets that they do not have the ability to raise rates. They do not have the ability to tighten, which hyperinflation runs completely rampant. That would be your kickoff to hyper-inflation. . . . 80% of all dollars in existence today have been printed or created over the last two years. . . . That is hyperinflation.”
Holter points out that the huge amounts of debt and vast amounts of currency creation are signs of a fast approaching “global bankruptcy.” Holter contends, “The world is in the process of bankrupting. That’s what you are watching right now. You are watching too much debt. They have to hyperinflate to be able to service the debt. When the debt collapses, what is going to be left? The dollar is the reserve currency of the world, 60% to 70% of central banks all over the world use the dollar as their reserves. So, when you have a global bankruptcy . . . the only two things that cannot bankrupt are an ounce of gold and an ounce of silver, which are proof that labor, capital and equipment have been used to create those. In a world that is bankrupting, do you want to own paper or do you want to own something that is real?”