Stefan Gleason Blog | Gold & Silver Surging Toward Long Awaited Breakout | Talkmarkets - Page 2
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Gleason is president of Money Metals Exchange, a national precious metals investment company and news service with over 450,000 readers, 35,000 paid customers, and $120 million in annual sales. He launched the company while president of a national newsletter publishing ... more

Gold & Silver Surging Toward Long Awaited Breakout

Date: Friday, May 7, 2021 9:25 PM EDT

 

Treasury Secretary Janet Yellen says not to worry, though, because the Fed has everything under control.

 

Financial News Anchor #1: US Treasury Secretary, Janet Yellen, tamps down concerns that President Joe Biden's plans for infrastructure jobs and families will further stoke inflation.

 

Financial News Anchor #1: Well, now the Treasury Secretary says she does not anticipate that inflation will be a problem in the U.S. economy. Treasury Secretary Yellen also saying, "Aside from some transitory," that's the Fed's word, "increase in inflation in coming months, I don't think there's going to be an inflationary problem. The Fed has tools to address them."

 

Janet Yellen: The Federal Reserve has the tools to address inflation should it arise. We will monitor that very carefully. We're proposing that the spending be paid for. And, I don't believe that inflation will be an issue, but if it becomes an issue, we have tools to address it.

 

The Fed may have the tools to keep inflation in check.  It could cease making asset purchases, jack up interest rates, and curtail money supply growth. At least in theory.

 

The real question is whether central bankers would actually have the will to do what’s necessary to bring down rising prices. Their current stated objective is the opposite – to raise inflation rates above 2% for an extended period.

 

The risk is that inflation overshooting their target, putting policymakers in a precarious position. Would they take away the punch bowl?  Would they be willing to inflict financial pain upon Wall Street, the big banks, and the U.S. government itself? 

 

Without the Fed’s low interest-rate stimulus, markets could collapse. Government borrowing costs could become unmanageable, sparking a sovereign debt crisis.

 

Treasury Secretary Yellen and Fed Chairman Powell know full well that the entire house of cards could collapse without the benefit of negative real interest rates. They may not say so publicly, but officials in Washington are effectively banking on inflation to bail themselves out in perpetuity.

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