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By Gregory Mannarino TradersChoice.net
Just last week we heard from the Chairman of the Federal Reserve Jerome Powell, and he said again that he is not concerned about the rising cost of living because he believes “inflation is not widespread.” Note the choice of words here, “inflation is not widespread,” therefore he believes it is contained.
The last time we heard a Federal Reserve Chairman use the word “contained,” it was then Ben Bernanke, who said repeatedly that the subprime mortgage crisis was “contained,” yet somehow it led to a worldwide meltdown of the entire financial system which was followed up by a public bailout.
The fact of the matter is this; inflation is not even close to being “contained” nor is it transitory. Today here in America inflation is surging higher at its fastest pace on record! What ever happened to the Federal Reserve mandate of price stability?
Understand the reality of the situation—the Federal Reserve is on a deliberate mission to inflate. Moreover, the Fed will continue to issue debt through one door and then buy it back via another in greater and greater amounts.
The debt is in a hyper-bubble.
Today the largest, and by far most dangerous financial distortion exists in the debt market, and the Fed seems to be on a mission to buy it all—which is massively inflationary. Moreover, the Fed has no intention whatsoever to stop.
The debt hyper-bubble has caused a stock market hyper-bubble.
The second largest distortion existing today is in the stock market. The stock market hyper-bubble is being fueled directly by the debt market hyper-bubble, courtesy of the Federal Reserve. I have explained in many of the articles which I have written here exclusively for the Trends Journal, that the stock market would continue higher, hitting new record high after new record high. Well, just this past Friday the Dow Jones Industrial Average closed for the first time ever above 35,000! With the S&P500 and the NASDAQ also posting new all-time highs.
This phenomenon of the stock market hitting record high after record high almost on a weekly basis will continue as long as the Federal Reserve’s balance sheet continues to inflate. Today the balance sheet of the Federal Reserve stands at just over $8.24 Trillion dollars, which is higher than the GDP of most nations on Earth. I have a big secret for you, regarding the balance sheet of the Federal Reserve, we have not seen anything yet.
What you can expect moving forward is distortions getting monumentally worse across the entire spectrum of asset classes, which will eventually lead to a deliberately induced meltdown of the entire financial system—by design. The key here is to stay on the right side of all this.
Right now, the game remains “risk on,” meaning cash is making its way into risk assets as in the stock market. It is also at times like these where the smart money is not only riding this run higher in the stock market, but also looking at suppressed or “risk off” assets, like physical gold, and physical silver.