In the middle of a devastating pandemic as well as crushing economic downturn, the Federal Reserve’s attempts to control inflation are likely to tank the dollar and boost Bitcoin, according to Morgan Creeks Anthony Pompliano.
The Fed is racing against time at the moment in completing its annual policy review and is reluctant to raise interest rates until inflation hits 2%. In his August 5 letter to subscribers Pomp said that the Fed’s actions were going down “a path that could end disastrously”. According to him, the nature of the U.S. economy is such that it’s “nearly impossible to manipulate with nuanced control” and the central bank has a poor record with inflation targets over the years, having only “come within +/- 10% of that target 3 of the last 10 years. He painted a worst case scenario where more stimulus money would need to be printed to solve worsening economic conditions, coupled by a delay in raising interest rates.
“If that were to happen, the Federal Reserve would be accelerating inflation at the exact moment that they should be reining it in. I wish that I could argue that this scenario would be hard to see coming, but rather I think it is actually likely”.
Pomp’s entire point was that the actions by the Fed were devaluating the dollar, and that it isn’t prudent to hoard the fiat currency. He predicted massive capital transfers to real estate, Gold, Bitcoin and stocks. He also predicted that Bitcoin would be the biggest winner out of the four asset classes as investors try to hedge against a failing dollar.
As investors look to hedge, consumer prices keep going up amid the pandemic. Grocery prices have risen nearly 11% for meat, and chicken from February to June, while beef and veal have increased 20%. Unemployment incomes have also taken a major hit from $3,684, to $1,284. The economic downturn has had congress men and women debating on how to ease the economic strain on households. The discussions have seen Democrats and republicans hit a deadlock over stimulus packages, and President Trump threatening to by pass congress if an agreement isn’t reached soon.
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