The Fed is Now Cornered… and There’s Nothing It Can DoInboxGGains Pains & Capitalto me 6 hours agoDetails
October 19, 2021
The Fed is Now Cornered… and There’s Nothing It Can Do
The Fed is now cornered (to a degree).This is not to say that the Fed cannot continue to print money, nor does it mean the Fed is “out of ammunition” as many bears like to claim.The Fed is technically never out of ammunition as it can print money forever. Moreover, as the Fed’s policy response to the 2020 pandemic has shown us, the Fed is more than willing to engage in policies that are technically illegal (buy corporate bonds, buy municipal bonds, etc.) by using loopholes (print the money and give it to the Treasury to buy these assets) when it’s necessary.However, there are some problems that Fed policy simply cannot solve. And today, the markets are facing two of them.They are:1) Supply-chain issues.2) The global energy crisis.Printing money, Quantitative Easing (QE), maintaining low interest rates, even buying assets and securities that are technically outside the Fed’s legal mandate…. NONE of those policies can remedy supply-chain issues, or their inflationary effects.The Fed can’t MAKE people return to work… or force them to give up their new careers and go back to unloading cargo ships or working in manufacturing facilities.Similarly regarding the Energy Crisis, the Fed can’t print oil or coal. QE doesn’t lower energy prices. And maintaining lower interest rates doesn’t make coal miners/ oil employees go back to work and start drilling or mining.Put simply, there isn’t a thing the Fed can do to solve these crises. And they are igniting inflation in a way we haven’t seen since the 1970s.To whit, inflation expectations are erupting higher. They’ve just taken out their May 2021 highs, which marked the PEAK for the last inflationary thrust.
These problems (supply chain issues and an energy crisis) aren’t going away any time soon either… Copper has just hit an all-time high!
Meanwhile, Oil just broke out of a 13 year bear market!
With the right investments, we are talking about the opportunity to make literal fortunes here as inflation RIPS through the financial system igniting MASSIVE price spikes in key sectors.On that note, I recently alerted Private Wealth Advisory subscribers to FOUR unique inflation plays designed to profit from this incredible trend.As I write this, they’re already up 23%, 31%, 36% and an incredible 133%.