Fed Grilled About Sound Currency

As financial markets gyrated this week, Federal Reserve chairman Jerome Powell touted the U.S. dollar as a form of “sound money.” More on that incredible take in a moment. 

But first, let’s review this week’s market action.

Inflation fears helped drive another spike in long-term bond yields, and by Thursday that began to spook Wall Street. The Treasury market is now off to one of its roughest starts to a year on record. As a result, calls are mounting for the Fed to up its bond purchases.

A steepening yield curve is helping to depress precious metals prices. Rising real interest rates tend to be negative for the gold market.

But with short-term rates remaining locked near zero and inflation pressures rising, the case for rising real rates as a major trend remains tenuous at best. If central bankers begin deploying yield curve control measures to bring down long-term bond yields, that could serve as a catalyst for the next up-leg in gold and silver.

In the meantime, gold and silver have fallen back sharply here at the end of the week – with gold trading down to $1,730 and silver at $26.50.

In other alternative asset markets, Bitcoin prices plunged more than 25%. The cryptocurrency had been gaining increasingly widespread adoption by some large corporations and financial institutions. At the same time, Bitcoin has come under increasing scrutiny by regulators and central bankers.

Treasury Secretary Janet Yellen recently derided cryptocurrencies for supposedly facilitating illegal activity. Yellen along with some members of Congress are threatening to crack down on crypto markets.

Meanwhile, Fed chairman Powell along with other central bankers and the International Monetary Fund are vowing to roll out official digital currencies in the near future. As the globalist Great Reset agenda proceeds, a more globally coordinated, centralized currency regime may be coming – one that seeks free-market digital currencies as well as paper cash. 

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