Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Biden Spending to Build Back Stagflation

Economics / Stagflation Nov 17, 2021 - 10:24 AM GMT

By: MoneyMetals

Economics

President Joe Biden signed a $1.2 trillion “infrastructure” bill into law on Monday amid growing concerns that his administration’s policies are fueling higher inflation.

Former Treasury Secretary Larry Summers, a Democrat, is warning of an economically and politically ruinous inflation problem brewing.

He wrote in a recent Washington Post op-ed that “far too much fiscal stimulus and overly easy monetary policy” will “threaten prosperity and public trust unless clearly acknowledged and addressed.”

That was an apparent swipe at the Biden administration’s pattern of denials and misdirections whenever confronted about inflation.


Joe Biden himself has bizarrely insisted that his spending package won’t cost anything because it is “paid for.” Of course, if the government really had the resources to pay for his “Build Back Better” programs, then it wouldn’t be running a $2.8 trillion annual budget deficit.

Biden has even asserted that his spending programs will reduce inflation. Perhaps he slept through Economics 101 and missed the lesson on how fiscal and monetary stimulus affect prices in the economy.

Meanwhile, Treasury Secretary Janet Yellen is doing a media blitz to deflect blame for surging consumer costs. “It’s important to realize that the cause of this inflation is the pandemic,” Yellen attempted to argue on CBS’s "Face the Nation” Sunday.

Based on that line of reasoning, price instability will be with us for as long as the virus is with us.

And officials seem to be as hopelessly unable to defeat the virus as they are stubbornly unwilling to fight inflation.

As the threat of prolonged inflation, or even stagflation, rises – and as the Fed continues to downplay the need for action – gold has perked up nicely.

The bulls appear to be gaining control of the market. If we see strong follow through on last week’s gold rally, a leap over the key $1,900 level could be in the cards near term.

A major driver of gold buying right now is rising inflation fears. It does not take an economics degree to see that rising prices combined with massive supply bottlenecks are not good for the economy or for consumers.

In fact, recent data pointed to the highest levels of inflation in 30 years, and it could be just getting started.

The latest release of the Consumer Price Index, or CPI, showed an annualized rise of 6.2% and the Producer Price Index came in at 8.6%. As prices have continued to rise at a scary pace, even the Fed is now trying to wiggle out of its oft-repeated “transitory inflation” line.

A further rise in prices may not only have a deleterious impact on the American consumer, it but may also force the Fed to take action.

The central bank thus far, however, has attempted to ignore the inflation problem. Having already backed itself into a corner, the Fed now sees no way to appease markets while calming inflation. If it gets even further behind the inflation curve, the consequences could be severe and long-lasting.

Despite the Fed’s nonchalant tone when it comes to inflation, investors appear to see what may be coming down the road.

The threat of higher prices could not only affect the consumer but could even drive the economy back into a full-blown recession.

The Fed has made clear that even though it plans on reducing its monthly security purchases (QE), rate hikes need not follow the end of QE. In other words, the central bank may elect to maintain ultra-low interest rates for a year or more.

Through years and years of zero percent interest rates, negative real interest rates, and quantitative easing, the Fed has backed itself into a corner from which there may be no escape.

If the Fed keeps its foot on the gas, the effects could be devastating over the long-term.

That’s why many investors are now scrambling to get their hands on physical gold and silver. This is one of the few asset classes available that tends to perform well during stagflation – a period of economic misery that may come to define the Biden administration.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2021 Stefan Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in