Gold Consolidates And Fuels From Fed For Big Move
The Federal Reserve recently moved to switch to average inflation targeting. It's easier to understand this in relation to what it was before. Before, they targeted inflation each cycle. They didn't worry about unemployment too much, because of the so-called relationship between inflation and unemployment, the Phillips Curve. They thought that if they targeted a 2% inflation rate, then unemployment would fall in line. Things have changed though, and in a big way.
The End of a Deflationary Era
The United States has flouted around the globe, telling everyone what to do. We invaded Iraq and secured oil fields. More recently, we confiscated a huge tanker of oil from Venezuela. No one messes with America, because we back it up. Whatever you might say about the counterfactual, we definitely dropped lethal atomic bombs on Japan, and no other country has ever done anything of that sort.
Our power is evident in the global reserve currency being the dollar. In the past, this hasn't been a problem. In fact, there are some benefits to being the reserve currency that are worth fighting for, one of which being the ability to print yourself out of debt without causing inflation. How is this possible, sings the chorus of conservative baby boomers. They grimace as rates stay low, collecting their social security and worrying that it won't be worth as much down the road. An entitlement that no other generation will see, yet they feel entitled to. An entitlement that is obviously stealing from other generations, so that they can live to the old age of 90 in a trailer park costing the system hundreds of thousands of dollars each year. If there was ever a reason for a pandemic, that would be it.
In any case, the question remains, even if not on their dementia-adled minds that surf Facebook with glee, consuming hours of highly targeted ads that control them. "They took our jobs" they whisper. The reason is that inflation is essentially determined by the demand for a currency and the supply of a currency, not just the supply. Not only that, but the supply doesn't matter as much as how much of it is made available for the purchase of goods. If we print a bunch of money, but it only goes on the balance sheet of banks, so that they are legally able to loan (because it allows them to meet requirements) then nothing happens yet. Only when the money goes into the hands of spenders does it matter. In the past, this is what has happened, but the tide is changing.
Who got that $600 a week? What types of people? Furthermore, what types of people benefited from the bailout? What are their spending habits? How will them receiving money effect the velocity of money? This is the question necessary to answer to determine whether or not we will be facing inflation in the future. The answer is simple. Uneducated people that were not able to make themselves indisposable are receiving infusions of money, and it will be spent. Prices will go up. That's why the Fed is changing the inflation target. They need to be able to keep rates low while staying in the bounds of their mandate.
Inflation will increase in the coming months, especially if more stimulus is made available to people that spend it. What does this mean for the price of gold? Well, it means a lot. Now that America is not just a financial system to the rest of the world, but a group of people that need to be cared for, the price of the dollar will be less. It won't be worth as much. This further exacerbates the inflation issue. Our system and economy is seen to be dysfunctional. As we interfere more and more into the economy, there is more chance for corruption, and decentralization is seen to be more attractive.
Bitcoin isn't the only decentralized form of payment. So is gold. Hence, the consolidation you see here will lead to a big move.
The End of a Deflationary Era
The United States has flouted around the globe, telling everyone what to do. We invaded Iraq and secured oil fields. More recently, we confiscated a huge tanker of oil from Venezuela. No one messes with America, because we back it up. Whatever you might say about the counterfactual, we definitely dropped lethal atomic bombs on Japan, and no other country has ever done anything of that sort.
Our power is evident in the global reserve currency being the dollar. In the past, this hasn't been a problem. In fact, there are some benefits to being the reserve currency that are worth fighting for, one of which being the ability to print yourself out of debt without causing inflation. How is this possible, sings the chorus of conservative baby boomers. They grimace as rates stay low, collecting their social security and worrying that it won't be worth as much down the road. An entitlement that no other generation will see, yet they feel entitled to. An entitlement that is obviously stealing from other generations, so that they can live to the old age of 90 in a trailer park costing the system hundreds of thousands of dollars each year. If there was ever a reason for a pandemic, that would be it.
In any case, the question remains, even if not on their dementia-adled minds that surf Facebook with glee, consuming hours of highly targeted ads that control them. "They took our jobs" they whisper. The reason is that inflation is essentially determined by the demand for a currency and the supply of a currency, not just the supply. Not only that, but the supply doesn't matter as much as how much of it is made available for the purchase of goods. If we print a bunch of money, but it only goes on the balance sheet of banks, so that they are legally able to loan (because it allows them to meet requirements) then nothing happens yet. Only when the money goes into the hands of spenders does it matter. In the past, this is what has happened, but the tide is changing.
Who got that $600 a week? What types of people? Furthermore, what types of people benefited from the bailout? What are their spending habits? How will them receiving money effect the velocity of money? This is the question necessary to answer to determine whether or not we will be facing inflation in the future. The answer is simple. Uneducated people that were not able to make themselves indisposable are receiving infusions of money, and it will be spent. Prices will go up. That's why the Fed is changing the inflation target. They need to be able to keep rates low while staying in the bounds of their mandate.
Inflation will increase in the coming months, especially if more stimulus is made available to people that spend it. What does this mean for the price of gold? Well, it means a lot. Now that America is not just a financial system to the rest of the world, but a group of people that need to be cared for, the price of the dollar will be less. It won't be worth as much. This further exacerbates the inflation issue. Our system and economy is seen to be dysfunctional. As we interfere more and more into the economy, there is more chance for corruption, and decentralization is seen to be more attractive.
Bitcoin isn't the only decentralized form of payment. So is gold. Hence, the consolidation you see here will lead to a big move.
Comment:
DELETE the negative parts about social security, we all die obviously and it was promises made, but there maintains some sickness in the system for which credibility need be adjusted. Credibility in the form of the global reserve currency.