How Does the Fed Deal with Inflation?

It has two courses of action — which one will it take?… May 04, 2021 UNSUBSCRIBE | ARCHIVES How Does the Fed Deal with Inflation? External Advertisement SHOCKING: Live “Unboxing” Secret to 16,848% Gains! At first, what this man unboxes live on camera will confuse you… But then, it will start to sink in… And your life may never be the same. Click here now to see what’s in the box. Dear Money & Crisis Reader, Yesterday I pointed out how inflation has become deeply embedded in our financial system. As a quick recap, inflation arrives in stages. Phase 1: The price of raw materials (what producers/manufactures pay for supplies) Phase 2: Factory gate prices (what producers charge distributors/retailers). Phase 3: Retail prices (what you, the consumer, pay). As I noted yesterday, all three of these phases are in place. This tells us that inflation is now deeply embedded in our financial system. Historically, the only thing that has stopped inflation is the Fed tightening monetary policy by either hiking interest rates or tapering its Quantitative Easing (QE) programs. During the last inflationary scare in 2010-2011, the Fed allowed its QE2 program to end. It then waited several months before introducing any new monetary programs. When it finally did introduce one, it didn’t involve money printing. Instead, the Fed used the proceeds from Treasury sales to buy long-dated Treasuries through a process called “Operation Twist.” This was a kind of stealth tightening. Bear in mind, that was a relatively minor inflationary scare. During the last legitimate inflationary storm in the 1970s-1980s, the Fed was forced to be MUCH more aggressive with its tightening, raising the Fed Funds rate (the interest rate it charges banks on overnight loans) from 4.5% to over 19%! It’s worth noting that this triggered two SEVERE recessions (shaded areas). So, what will the Fed do to address inflation this time? A kind of stealth tightening like we saw in 2011… or aggressive tightening like we saw in the late 1970s? The Fed’s Plan for Today’s Inflation The answer may surprise you… Warning: Financial Extinction Event Imminent On July 14th, 2021, a seismic event is expected to send our financial system into a devastating tailspin. At this point, there’s nothing the Federal Reserve, the government or even the President can do to stop it… If you’re not prepared for what’s coming, you should do so now. Click here to see how some extremely powerful strategies could mean protecting yourself from the carnage that’s coming… NEITHER. That’s correct. The Fed doesn’t believe the U.S. is experiencing real inflation yet. According to Fed Chair Jerome Powell the inflation we’re experiencing is “transitory” meaning it won’t last, so the Fed doesn’t have to do anything. Powell is not alone. Fed officials across the board have referred to inflation as “transitory” stating that even if inflation rises above the Fed’s target of 2% (say to 2.75% or even 3%), it’s not a big deal. (Bear in mind, inflation is already well over 3% now.) So, what does this mean? The Fed will continue to keep interest rates at zero, printing $125 billion per month all while ignoring the countless signals that inflation is already spiraling out of control. Yes, the Fed will eventually be forced to act once inflation becomes a political issue, but until then the Fed will have its “blinders” on. Which means… inflation is going to rage and rage. What does this mean for the markets? We’ll dive into that tomorrow. Until then… Best Regards, Graham Summers Editor, Money & Crisis How To Make Money From ANYTHING… Have you heard about the "Spoke and Wheel"? I never thought I would be able to make money from my writing. Not until I stumbled on this ingenious method to start making money from practically anything … I know it sounds crazy… I show exactly how it works, in detail, in my new book Skip The Line. I’ve even reserved 300 copies for my readers here. Find out how to get your copy before they’re gone! To end your Money & Crisis e-mail subscription and associated external offers sent from Money & Crisis, feel free to click here. If you are having trouble receiving your Money & Crisis subscription, you can ensure its arrival in your mailbox by whitelisting Money & Crisis. Money & Crisis is committed to protecting and respecting your privacy. Please read our Privacy Statement. For any further comments or concerns please email us at MoneyAndCrisis@threefounderspublishing.com. Nothing in this e-mail should be considered personalized financial advice. 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