Stagflation Time!

Last week was the monthly Federal Open Market Committee meeting, where the heads of the Federal Reserve make decisions regarding monetary policy for the United States. To nobodys surprise, the Fed decided to keep the Federal Funds Rate level with no increase or decrease in interest rates. Inflation has still been coming in over 3% the past several months, and obviously the Fed has not been able to control the rampant inflation problem within the United States. In fact, during the FOMC press conference, Fed Chairman Jerome Powell was asked about Stagflation, whereby he responded, “there is no Stag, and there is no ‘flation.'” to paraphrase.

Monetary policy has been extremely inflationary, with your purchasing power dwindling through the creation of money via government spending. Seems like with all the technological advances over the past 250 years, we would have deflation whereby our dollar could buy more and more. The Fed is always in the “market” of ensuring that there is some inflation, which is a hidden tax on our dollar. The Government and Fed LOVE inflation and hate deflation. They are always interfering with monetary policy to ensure that the Government can spend more than it taxes via inflation, aka money printing, aka government spending. There are various theories on whether government spending creates or grows our economy, but with a Debt to GDP ratio at 130%, the creation of dollars is NOT resulting in productive output with every dollar of government spending resulting in $0.70 of production.

What the Fed truly hates is STAGFLATION. This is where we have a recession combined with inflation. This results in unstainable America or a debt-based spiral whereby the Fed has no tools to fit it, a failing and falling monetary system. So, when Jerome Powell says there is no stagflation, is he telling the truth or oblivious. GDP has fallen the past five quarters in a row and is likely to be negative this quarter and the inflation battle has failed. Stagflations is likely in the future.

So, what do you do with your investments? We recommend purchasing assets that preserve your wealth, such as real estate, gold, and silver. These assets are hedges against inflation and are true wealth. Your money is fake and you don’t own your securities. If you can’t touch it, you don’t own it.