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By Gregory Mannarino TradersChoice.net
Haven’t you heard? The Federal Reserve is changing its “inflation is transitory” narrative to “inflation is contained.”
Contained, really? Where have we heard that before?
Oh yes! “Contained” was the exact same word as the former Fed Chairman, Ben Bernanke, used to describe the subprime collapse which led to a global financial MELTDOWN.
No… Inflation is not “contained,” nor is it even meant to be contained.
Today, despite inflation surging higher at its fastest pace on record, the Fed continues to run its “inflation creation” machine—the Fed is issuing debt through one door, and then buying it back through another.
I have explained FOR YEARS that this mechanism of the Fed issuing debt, then buying it back is massively inflationary. I have also explained that it was only a matter of time before inflation would surge higher because of it.
This debt revolving door mechanism is also MASSIVELY stock market positive, henceforth why the stock market continues to set new record highs.
The Federal Reserve IS public enemy number one. More specifically, the Fed is the adversary of the entire middle class. The Fed, by keeping rates suppressed since the onset of quantitative easing in November 2008, has literally robbed the middle class of TRILLIONS of dollars in realized wealth by not allowing people’s interest earning accounts to even remotely keep up with the surging rate of inflation.
This is GRAND THEFT on an epic scale.
This legal theft mechanism has, at the expense of the middle class, re-inflated a massive stock market HYPER-bubble. Moreover, QE now going on for 13 years has created monumental distortions across the entire spectrum of asset classes—AND NONE OF THIS IS BY ACCIDENT.
What can we expect moving forward?
The Fed has ZERO intention of stopping its asset purchasing program despite them calling for some kind of “taper” in the not-so-distant future. Moreover, even IF the Fed were to slow the pace of its asset purchasing program, the Fed would still be issuing and then buying historic amounts of assets—this again is massively inflationary and highly stock market positive.
Globally we can expect inflation to continue to surge higher, putting more pressure on the middle class. We can also expect that the savings rate of the middle class will plummet as they take on even more debt. We can expect that the stock market will continue to hit new record highs as the economy continues to free-fall. We can expect that the Fed will not only continue to buy assets, but they will continue to funnel dollars to other central banks around the world who will in turn also buy more assets— WITH DOLLARS.
We can expect that price action distortions across the entire spectrum of asset classes will get much worse. We can also expect that at one point these deliberately created market distortions will correct to some kind of fair value, actually an over correction will occur, and a financial crisis unlike anything which has ever been seen before will change the world—and a new global feudal system will emerge.