Outlook 2021: Further U.S. Dollar Debasement Ahead

In a year that was marred by a global pandemic and a wave of economic restrictions that crippled many small businesses, financial markets proved to be resilient.

Of course, that resilience owes in no small part to the unprecedented outpouring of stimulus from Congress and the Federal Reserve.

More stimulus is on the way. On Sunday, President Donald Trump signed the latest COVID relief package into law.

Trump had earlier blasted the bill as a pork-laden “disgrace” with inadequate $600 direct payments. Under pressure to avert a government shutdown and keep unemployment benefits flowing, Trump finally relented.

And he will continue to push the Senate to take up his $2,000 stimulus check proposal.

Meanwhile, the presumptive President in waiting, Joe Biden, is vowing to build on Congress’ “down payment.” Biden wants larger checks, additional handouts to state and local governments, and more government spending across the board.

If Republicans maintain control of the U.S. Senate, pending the outcome of the Georgia runoff elections, they could potentially thwart some of Biden’s spending ambitions.

Whether they’ll have the political will to do so is another issue. Some Senate Republicans bucked their own Majority Leader and joined with radical leftist Bernie Sanders and President Trump to form an odd coalition pushing for larger stimulus checks.

The populist sentiment toward aiding ordinary Americans is certainly understandable given the pandemic profiteering by giant corporations listed on Wall Street.

Their gains came at the expense of businesses deemed less “essential” by state and local governments. They also got an artificial boost from the central bank as it went on a buying spree in Treasury and corporate bond markets.

Will 2021 be the year the Fed’s inflationary chickens come home to roost?

The setup for a major inflation outbreak in the real economy in the months ahead is clear and present. A precious metals price breakout could therefore be imminent.

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