Real Inflation isn’t Stopping

Last week Peter appeared on Fox Business with Liz Claman and co-panelist Scott Sperling to react to last week’s FOMC decision to hold rates steady. Peter, Liz, and Scott discuss Jerome Powell’s remarks from the decision, recent movement in gold and the equity market, and how economic growth may be able to offset some of the Federal Reserve’s inflation.

Reiterating how backwards the Fed’s thinking is, Peter argues the United States is already in recession territory, thanks in large part to the last two decades of monetary policy:

The Federal Reserve created an enormous inflation problem. Current monetary policy is still way too loose. They aborted the hiking prematurely. Rates need to be a lot higher than they are right now. And look, the economy is weak. I think we’re in recession! I think we’ve been in a recession for quite some time. That’s why Donald Trump was elected president, but unfortunately that recession is going to have to get a lot worse to put the inflation genie that the Fed deliberately released back in that bottle.

Scott offers a glimmer of hope; if generative AI and other innovations can boost productivity significantly, the economy may be able to withstand some of the consequences of inflation. Peter agrees, but points out there’s still a long road ahead, and monetary inflation continues to increase:

I think productivity can offset some of the damage that the Fed has created by expanding the money supply to the degree that it did both with their first three rounds of quantitative easing and then during COVID. We still haven’t felt all the consequences on consumer prices from the inflation the Fed created in the past, but they’re continuing to create more inflation. Credit has expanded the entire time that they were supposedly hiking rates. So it was too little too late.

This originally appeared on SchiffGold.com.

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