This is all happening in real-time: please, please do not ignore these warnings.
It’s not a prediction, it’s reality!
Isn’t it fascinating to see an entity that’s in control of everything yet controls nothing? That’s the state of the U.S. Federal Reserve today, which has desperately wanted the price inflation rate to meets its 2% target. Despite its ability to set the federal funds rate, the Fed has failed miserably at its objective of managing inflation.
Rather than concede that its policy of flooding the banking system with cash through relentless bond purchases is utterly wrongheaded, the Federal Reserve is doing what it has done for decades: change the standard of success.
***Thus Fed Governor Lael Brainard is now recommending a more “flexible” inflation target.***
And just like that, Brainard has created a new construct – “lost inflation”: “The central bank is considering a promise that when it misses its inflation target, it will then temporarily raise that target, to make up for lost inflation. The idea would be to avoid entrenching low U.S. price growth which has consistently undershot its goal.”
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So now we’re getting a glimpse of the Federal Reserve’s plan to deal with sliding inflation: raise their arbitrary target and hope that raising the inflation target will magically raise inflation itself. Of course, that won’t work, so the Fed will have to revert to its one and only anti-recession tool, which is interest rate suppression:
This is the Japanification of American monetary policy, an inevitable push towards interest-free government bonds and, eventually, bonds the holder must pay to own. As we would expect, former Fed Chair Janet Yellen applauded the flexible target idea as a “worthwhile thing” – I’m sure she wishes that such a thing had existed when she was in charge.
It doesn’t really exist at all: it’s wishful thinking that this scheme will work, but Fed officials have to make up problems and create the appearance that they’re coming up with solutions. In this instance, the apparent problem is “lost inflation” and the solution is essentially for us to wear thick glasses in order to distort the numbers we’re clearly seeing.
By the way, Brainard the Brain also added that her idea is too complex to explain to the public. We’re evidently not ready for the Fed’s brilliant solutions – or more accurately, the Fed isn’t ready for the market’s return to reality.
Own real assets, clean up your personal finances (tighten up the ship), and be ready for the economic winter because it is coming.
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.