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  • Writer's pictureThorsten Polleit

Why the Fed Is So Desperate to Hide Price Inflation

"However, once people begin to lose confidence in the Fed’s willingness and ability to keep goods price inflation low, the “safety net trickery” reaches a crossroads. If the Fed then decides to keep interest rates artificially low, it will have to monetize growing amounts of debt and issue ever-larger amounts of money, which, in turn, will drive up goods price inflation and intensify the bond sell-off: a downward spiral begins, leading to a possibly severe devaluation of the currency. If the Fed prioritizes lowering inflation, it must raise interest rates and reign in money supply growth. This will most likely trigger a rather painful recession-depression, potentially the biggest of its kind in history.

Against this backdrop, it is difficult to see how we could escape the debasement of the US dollar and the recession."

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