Inevitable Inflation!

Word Inflation on up trend arrow, with financial data visible on the background.

Politicians are successfully delaying the inevitable in an election year, but that doesn’t change the fact that another stimulus bill will be necessary and soon, just in order to keep many Americans out of growing food lines, unemployment lines, and shelter camps. U.S. Treasury Secretary Steve Mnunchin, who’s been MIA from public view for at least six months, went on television yesterday to encourage Congress to give the Federal Reserve permission to create even more fiat money. Specifically he stated that, “Now is not the time to worry about shrinking the deficit or shrinking the Fed balance sheet.” A “watered-down” or “skinny” $650 billion stimulus bill recently failed in the Senate, due to Democrats and even a few Republicans who felt it was simply too insignificant to provide necessary support. Our lame response to COVID-19 requires further financial stimulus, but we must realize the ramifications it is creating.

Due to the recession, the inflationary pressures have been offset and therefore mitigated, which is unfortunate in the sense that they will gain speed and pressure much quicker as the economy attempts to recover and recessionary pressures begin to dwindle. John Doody, a former Republican member of Congress recently said, “Always remember… Politicians’ No. 1 goal is reelection. To accomplish this, they try to get nine slices out of an eight-slice pizza… to get the economy to deliver more output and jobs than it’s able to provide. But no matter how they slice the pizza, the size of the pie doesn’t change. All politicians are really doing is debasing the dollar.”

No doubt the stock market would have collapsed much further back in March, had it not been for the Fed’s massive “liquidity” injection into the system. The fact that it didn’t suffer a fatal stroke doesn’t make it a healthy economy by any stretch of the imagination. Interest rates remain near zero, while skyrocketing stocks have no legitimate foundation to stand on and even less to carry them forward in the future. The Fed wants inflation to run higher in order to make up for economic recession. However, inflation devalues the dollar, so regardless of “stimulus,” the poor continue to get poorer. True protection from this insidious economic spiral can be achieved from the time-tested safety of hard assets like physical precious metals, which increase in relative value as stocks, commodities, and other dollar-based assets continue to plummet during inflationary times, leading to the need for even more economic stimulus.

The value of precious metals has been artificially retarded as a result of ongoing political pressures for quite some time, but the coming inflationary pressures are not going to fall victim to the same artificial manipulation. One of the greatest tools a government has to offset inflation is interest rate reduction, but the Fed has completely abused that tool and left nothing in the quiver. The days of mitigating inflation with lower interest rates are over and as growing inflationary pressures continue to mount the dollar’s value will continue to dwindle. Protect your portfolio, assets and legacy with the time-tested safety of gold and other precious metals. Call the experts at American Bullion now for assistance, at (800) 653-GOLD (4653)!

Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.