Is Biden Going to Make a Nixon-GOLD Move?
No more stimulus checks, the end of mortgage forbearance, and a Biden-led program devoid of social infrastructure, means that his approval rating is dropping fast.
People who voted Democrat (at least some of them) did so because of the promise of aid to the working class, in the pursuit of inclusive capitalism.
The United States is the wealthiest country in the world, yet there are large portions of the population who find it next to impossible to realize their potential.
The problem the Biden Administration faces is that, in the eyes of the average American, government spending is suddenly not cool.
From thoughts of Universal Basic Income, politicians are now distancing themselves from progressive ideas, which require uncontrollable deficits and are now linked (in the eyes of the public) as the cause of inflation.
Courtesy: Zerohedge.com
Nothing brings down an administration faster than economic problems; consumers are complaining about housing prices, food prices, rent, cars and utilities, on top of not being able to afford discretionary expenses. With the holidays around the corner, Biden has a closed-door session with Powell, who just two weeks ago proclaimed inflation is not a problem, but now considers it a critical matter.
Biden made it clear to Powell that he either conforms to the idea that inflation must be chopped off, so the public is pleased, or he’ll find his way out the door himself.
A politically-influenced Federal Reserve Bank was vilified and considered unproductive in the Trump era, when Donald pressured Powell to lower rates to zero, but now the media doesn’t criticize Washington for twisting Powell’s arm, going as far as threatening to cancel him.
Therefore, if you want to understand why the markets are frantic right now, why tech stocks that are growing and changing the world are trading at 52-week lows, 3-year lows and even all-time lows, it has to do with the market’s disagreement with this political pressure to curb inflation.
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Courtesy: Zerohedge.com
As you can see, what the pandemic brought was the highest, year-over-year increase in government spending EVER.
If we compare the country today with 1968, the differences are immense. Therefore, we don’t think that Bank of America is making the correct comparison, in this case.
If anything, we believe today’s environment is much more closely related to how America felt right after the 1987-1990 slowdown.
Under the Keynesian economics regime, governments spend heavily, while the private sector contracts by much, as we saw in 2020 — this was classic John Maynard Keynes textbook policy.
Things go wrong when governments cut the aid, but the real economy doesn’t come back. But that’s not what we’re seeing; the economy is really strong, but Wall Street believes in the innovation that businesses are developing and hates the FED’s sudden aggressive nature.
Why tighten lending requirements, at a time when the economy should expand and allow more people from the lower-income brackets to attain better jobs? We shouldn’t be too quick to taper, if the government plans to be responsible and moderate.
Courtesy: Zerohedge.com
Wall Street is convinced that inflation is priced in. Therefore – GET THIS – bonds have started to forecast the first rate cut!
This is, by far, the most bullish indication that gold and gold stocks are the next big trade and I’m making a number of moves, as well as holding onto my 2021 positions, where investors received multiple chances to dollar-cost average on.
The bottom is in sight for gold and gold stocks; Wall Street has determined as much and Powell’s mistake and Biden’s pressure are only accelerating the bull market.
Best Regards,
Lior Gantz
President, WealthResearchGroup.com
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