Inflation And War Are Investors Prepared

The “I” word is… inflation. If a serious inflation cycle is beginning, a lot is going to change for the fiat-oriented citizens of the United States, and not in a good way.

Legendary investor, economist, and money manager Mohamed El-Erian is horrified by the US central bank’s relentless “We know it’s transitory!” inflation narrative.  

He believes that the Fed needs to act sooner rather than later to stop inflationary winds from becoming a hurricane.

My view is quite different. In my professional opinion, the Fed doesn’t need to do anything… because the Fed needs to be shut down. Private enterprise doesn’t need the “Financial Markets Welfare Office” that the Fed has become.  

Horrifically, American stock market investors no longer resemble capitalists. They look like socialist deadbeats, waiting for their next handout from a central bank mommy and government daddy.

Real estate inflation is a Fed creation that has made “debt for life” the hallmark of being a homeowner.  

If rates stay low, house prices continue to rise, and the banks make big profits from the sheer size of the mortgages. If rates rise, the banks and government entities (Fannie/Freddie) that control the mortgage debt foreclose on an enormous number of houses. Here’s the bottom line:

Win-win for the banks and government. Lose-lose for the average end of empire American citizen.

(Click on image to enlarge)

This long-term chart of the dollar versus gold is ominous.

It looks like the dollar’s endless decline is entering an acceleration phase. The chart action could be indicating that the Fed won’t raise rates to match inflation. Instead, as inflation worsens, it will essentially do nothing but make more “It’s transitory!” statements.

There will likely be a few tiny rate hikes as the Fed pays lip service to the coming stagflation, but in a serious hiking cycle, the housing market, the stock market, and the government bond market would all collapse. That means the Fed will just watch inflation surge and leave it to the government to solve the problem.

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