On Thursday morning, before the stock markets opened, the Federal Reserve unveiled a new massive $2.3 trillion stimulus plan.
The plan provides support for struggling local governments, businesses and households. The Fed will also be directly buying municipal bonds and high-yield bond exchange-traded funds.
I’ve been expecting something along these lines for a while now. But it is still shocking to see it actually taking place. The Fed is now tampering with markets in ways that make government actions in 2008 to 2009 look minor in comparison. And I think things are just getting started.
I continue to believe that all this money printing will cause major inflation in the near future. In 2008 to 2009, most of the money went directly to banks to bail them out. Now the newly printed money is directly funding governments, businesses and households. This will undoubtedly have different consequences.
In fact, I think inflation is one of the Fed’s primary goals here. If the Fed can spur 10% annual inflation, it will quickly wipe away a large portion of the massive debt pile we’ve accumulated. The question is, will the Fed be able to control inflation once it is unleashed? We shall see…
Yesterday, after the Fed announced the new stimulus program, gold and silver rocketed higher. Gold was up nearly 3%. And silver was up almost 4%.
Bitcoin was essentially flat before dropping a little bit this morning. But I consider that a win because it’s still up over the past week. Needless to say, I continue to favor bitcoin over all other cryptocurrencies. I haven’t seen anything to indicate that altcoins are likely to break out anytime soon, unfortunately. However, I will continue to monitor the situation closely.
I hope you all are well and remain that way.