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Gold has been almost straight up since the mid December rate raise. The Fed has been unusually quiet since their 25bip raise. Typically there would be multiple Fed speakers coming out immediately after the announcement trying to walk back the rate raise with cautionary verbage. Remember Rickards telling you there would be a December surprise with NO rate hike. Funny how that worked out Jim. I can’t beat you too much Jim, since your premise was absolutely correct. They really can’t raise these rates too much higher without triggering a mathematical tsunami. But Jim ask yourself this question. WHY did you ever think this carefully crafted Fed meme of a “global recovery” requiring “normalization” of interest rates would be suddenly changed with a surprise “no raise”.
CONfidence is vital to keeping the underlying economy going. It should be apparent to anyone with two functioning brain cells we are in a centrally “managed” or as some of us like to say a RIGGED economy. Every significant part of our perception is managed now. From the nightly news to the movies we watch to the business statistics. Its all designed to fit a narrative of a sustained recovery. Just one little problem…..its all a lie and with all lies eventually the truth will prevail. In this case one of the biggest impediments is the DEBT. They are fully aware that real inflation is already well entrenched in the “real” economic statistics. They are also fully aware the “brakes” that must be applied are the same interest rates being currently used to aid in giving us the impression they are trying to “manage” economic growth. So do you see their conundrum? LOL…they might actually achieve their public inflation target. So what happens then?
Well you already have stagflation that you are trying to conceal and now you’re getting undeniable inflation as this economy tries to achieve escape velocity. You raise again. The economy continues to heat up with even hotter evidence of inflation. You raise again. The market begins to see the same thing. Stagflation with rising inflation metrics. Its a recipe for disaster because you are raising interest rates into an underlying debt monster. Suddenly the debt monster rises to the fore and the Bond vigilantes begin to press their bets. If you the rates to rise beyond a certain level (and they will) all of their debt driven “recovery/growth” shuts down hard. Mortgage buying collapses. Car loans collapse. Consumer loans default. Mortgages default. Car loans collapse.
So will they keep raising rates? Will they collapse their debt bubble they reinflated? Well they instead, pull back on rate increases and let the underlying stagflation continue and inflationary pressures become self evident with the accompanying weakening dollar? Not a comfortable place to be in for our next Fed Chairman. Its math. Its a rule of Nature. You’re gonna pay the piper, one way or the other.
