Everyday we move toward a future where the explosion of the money supply will end up costing its users. The current monetary policy being employed by the Fed has lined the pockets of corporate bank accounts on Wall Street while leaving private citizens running businesses to pray that they can operate another day. Recently, Yelp has reported that 60% of its businesses have listed themselves as permanently closed. But what does this mean for you as a private citizen? An economic slowdown on the horizon. A second wave of the COVID-19 recession is ready to breach and take the Fed inflated bubble down to realistic measurements where company valuations will be reflective of the new dollar value. The nations unemployment rate can be seen as a measure of the economies productivity and output, while it’s at 8.4% right now compared to the insane 11.4% high in April, the economy struggles to regain its footing as the bull it once was before the crash.
Former chair of the Federal Reserve, Alan Greenspan, has expressed his concern for the inflation rate as “unfortunately negative” as result of entitlement payments and the governments lack of action to tackle the deficit. But inflation can be construed as something other than just the increase in prices of a basket of goods, but also as the devaluation of savings. The expansion of the money supply was viewed as good policy to stimulate the economy and provide a cushion for citizens and publicly traded corporations to fall back on. But this cushion will come at the cost of the inflation tax. Back in 2017, Janet Yellen was quoted calling inflation for that year as “more of a mystery.” And this year we have Jerome Powell steam rolling policy that would commit to lower interest rates until inflation and employment levels reach optimum levels; leaving the cost of living to skyrocket while wages remain the same. If Yellen claimed back in 2017 that inflation was a mystery, then would that not invalidate the Fed’s methodology for inflation manipulation? This should make us all feel skeptical of the claims Powell has been chanting for the past 6 months and even more skeptical of their inflation calculations.
As the fed pushes to nationalize private entities and income, it is up to you as the investor to protect your savings by increasing your investment rate. One way to protect yourself is by purchasing real assets such as gold, silver, commercial and residential properties. According to Yelp, “home, local, professional and automotive services” have been able to withstand the effects of the recession. Specifically, towing companies, plumbers and contractors have maintained closure rate of roughly .6%. Acquiring firms within these industries would help curb the negative impacts of the recession and aid to further diversify your portfolio. Take control of your financial future and get in touch with one of our private bankers at Lee Chandler today.