STAGFLATION – HANDS UP IF YOU KNOW WHAT IT MEANS


 

The Federal Reserve is broadcasting, as soon as this Thursday 27 August 2020, that is going to unleash inflation in a big way.

Jerome Powell may well turn out to be the antithesis of former Fed Chair Paul Volcker. Volcker is famous for stopping the runaway inflation of the late 1970s/early 1980s when interest rates in the USA rose to 19%.

Powell, on the other hand, is signalling that he is perfectly happy to let the inflation genie out of the lamp at just the perfect time, amidst the COVID-19 economic slump, high un-employment, and mind-boggling debt.

Gold has already exploded to over USD$2,000 per ounce. Imagine where it and other inflation hedges will go by the time the Fed has REALLY turned on the printing presses.

Stagflation will be back with vengeance.

It is therefore imperative that you keep an eye on what the bond market does next.