However, the Fed is backing off from stimulus. If it actually tightens as Fed Chair Paul Volcker did, we will avoid hyperinflation; but we will not avoid the recession that is already forming.
Bill Holter discusses the likely outcome of a Fed tightening cycle.
With the massive levels of debt in the system, raising rates will be a short term effort.
The conference room in the New York Fed was located just off the main trading floor, and its doors were open during meetings so people could quietly go in and out. The room was anchored by a large table..
The gold stocks get no respect. With respect to gold, the gold stocks are cheap. The Gold/HUI ratio is at 7.44, well entrenched at levels suggesting to us that gold stocks remain cheap relative to gold.
In the first half of 2021, I bet that the inflation I had been predicting would rise so hot through the year for so long that it would kill the stock market bull. It’s time to call the bet.
Gold will need to see its ‘real’ (commodity adjusted) prices start to rise before a negative macro is definitively indicated. Today we are in a transitional phase..
Trying to restore something like normal, with positive real rates and a reasonable balance sheet, won’t be easy. The Fed will need a lot of luck to kill inflation without causing a recession.
The bottom line is the Fed caved on its last quantitative-tightening attempt, abandoning it years early. Once that tightening forced stock markets to the verge of a new bear, the FOMC lost all courage to keep normalizing.
