Most people seem to think the Federal Reserve just about has price inflation under control. As Money Metals' Midweek Memo host Mike Maharrey explains, it doesn't. And it won't. That's because price inflation is the Fed's stated policy. He also talks about the recent record-breaking run for gold and why this bull likely still has legs.
Mike opens the show talking about siblings.
"Any of y’all who have more than one kid have probably witnessed the following. One kid does something mean to the other and makes them cry. When you inquire about what happened, the guilty kid swears, 'I didn’t do it.' When you call them out and tell them you saw it happen and you know they did it, they still insist, 'No I didn’t.' Then they’ll try to blame the whole incident on somebody else. 'Oh, the dog did it.'
"This is exactly what the Federal Reserve and the government do when it comes to inflation. They did it. They did it on purpose. But they’ll look you straight in the eye and tell you they didn’t."
Mike points out that the mainstream is pretty convinced the Fed has price inflation under control. The consensus is for a rate cut in September. This is one of the reasons gold broke $2,500 an ounce last week and has set a couple of new records.
"Speaking of which, did you know a 400-ounce bar of gold is worth over $1 million for the first time ever? We hit the $1 million gold bar milestone on Friday when the price of gold topped $2,500 for the first time."
Mike reiterates that the much-anticipated pivot to rate cuts isn't a victory over inflation. It's a surrender.
"The so-called victory over inflation means a return to inflationary policies – in other words, more inflation."
Mike notes that there is another factor pushing the price of gold higher - Chinese demand.
"Demand for gold was white-hot in China last spring, helping drive global prices to record highs. Chinese demand slowed in recent months due to high prices, but there are signs another Chinese gold buying spree could be on the horizon. The People's Bank of China has given several commercial banks new gold import quotas in anticipation of revived demand despite high prices."
Mike then pivots back to the inflation topic, pointing out that despite news that price inflation is "down," it really isn't down.
"Price inflation was up in July.
"And it will be up in August.
"And it will be up in September.
"And it will be up next year, too.
"That’s because rising price inflation is the Federal Reserve’s stated policy."
Mike highlights the July CPI data to underscore this point.
Then he asks an important question: "Have you ever stopped to wonder what’s so special about 2 percent? Like why is that the target? What is so amazing and perfect about prices going up 2 percent every year?"
"Nothing. They literally made it up. They pulled 2 percent out of their rear ends and then just said it enough times that everybody thinks that’s the Goldilocks CPI. There is literally no actual rationale for it. There’s no science. There’s no formula."
Think about what this actually means. The Federal Reserve and the U.S. government intentionally devalue your money as a matter of policy. Mike provides one example of how much they have lowered your purchasing power with a minimum wage illustration using pre-1964 silver quarters. He concludes that we don't have a wage problem. We have a money problem.
"And the government caused it! It’s devalued your money. Again, this is the stated policy."
Mike then raises the next question: why?
"The government needs inflation. It needs to be able to expand the money supply in order to maintain its borrowing and spending habits. It needs the central bank to create money out of thin air and monetize the debt. Easy money is the fuel that powers big government. It’s the engine that powers the welfare and warfare states. And easy money means price inflation."
So, for the central bank and government officials, inflation isn't a problem. It's only a problem when you notice.
Mike wraps up the show with a call to action.
"The only way to protect yourself from this monetary malfeasance is to turn your devaluing dollars into real money – gold or silver. So, now is a great time to call 800-800-1865."
Articles Mentioned in the Show
Import Tax Cut Boosts Indian Gold Demand
New Import Quotas Could Foreshadow Another Surge in Chinese Gold Demand
About the Author
Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
