“Irrational exuberance.”
In 1996, then Fed Chairman Alan Greenspan sparked an international spectacle by uttering that phrase.
It should have been a dull and forgettable speech. But investors took Greenspan’s phrase to mean that the Fed would soon raise interest rates… which they thought would slow the global economy.
Greenspan didn’t actually say the Fed would raise rates. Nor did he intend to signal that.
Nonetheless, the reaction was swift and panicky. US markets were closed at the time, but stocks in Japan and Hong Kong dropped 3%. The German stock market fell 4%. When trading started in the US the next day, the market opened down 2%.
Billions of dollars of wealth vanished in 16 hours… all because one man said two words.
That’s the absurd level of power the Federal Reserve has over the global economy. However, it also illustrates a disturbing fact…
After the president of the United States, the most powerful person on the planet is the chairman of the Federal Reserve.
Ask almost anyone on the street for the US president’s name, and you’ll get a quick answer. But if you ask the same person what the Federal Reserve is, you’ll likely get a blank stare.
They don’t know that the Fed is really the third incarnation of the US central bank, partly because of its deliberately obscure name.
And they don’t know that the Fed manipulates the world’s economic destiny by controlling the money supply of the US dollar, the world’s premier reserve currency (at least for now).
And that’s just how the Fed likes it. They don’t want the average person to understand the king-like power they wield.
After two failed central banking experiments in the 1800s, anything associated with a central bank became deeply unpopular with the American public. So, central bank advocates tried a new branding strategy.
They gave it a vague and boring name rather than call their new central bank the Third Bank of the United States (the previous two were the First and Second Bank of the United States). They called it “the Federal Reserve” and managed to hide it from the average person in plain sight.
Over 100 years later, most Americans don’t know what the Federal Reserve is, what it does, how it has eroded their standard of living, or how it can make or break their portfolio.
By simply uttering the right words, the Fed chairman can create or extinguish trillions of dollars of paper wealth both in and outside the US. He holds the economic fate of billions of people in his hand—probably including yours.
I’m reminding you of all this because the situation is urgent. The US is fast approaching an inflection point, and the Fed will be forced to make a fateful decision that will inevitably destroy trillions of dollars in wealth.
What the Fed does in the months ahead could be the single most important factor affecting your financial well-being.
Positioning yourself in the right investments is crucial to not only avoiding crippling losses but setting yourself up for potentially huge profits.
Inflation is the Real Crisis
In March of 2020, the chair of the Federal Reserve, Jerome Powell, exercised unfathomable power…
At the time, it was the height of the stock market crash amid the COVID hysteria. People were panicking as they watched the market plummet, and they turned to the Fed to do something.
In a matter of days, the Fed created more dollars out of thin air than it had for the US’s nearly 250-year existence. It was an unprecedented amount of money printing that amounted to more than $4 trillion and nearly doubled the US money supply in less than a year.
One trillion dollars is almost an unfathomable amount of money. The human mind has trouble wrapping itself around such figures. Let me try to put it into perspective.
One million seconds ago was about 11 days ago.
One billion seconds ago was 1988.
One trillion seconds ago was 30,000 BC.
For further perspective, the daily economic output of all 331 million people in the US is about $58 billion.
At the push of a button, the Fed was creating more dollars out of thin air than the economic output of the entire country.
The Fed’s actions during the Covid hysteria—which are ongoing—amounted to the biggest monetary explosion that has ever occurred in the US.
When the Fed initiated this program, it assured the American people its actions wouldn’t cause severe price increases. But unfortunately, it didn’t take long to prove that absurd assertion false.
As soon as rising prices became apparent, the mainstream media and Fed claimed that the inflation was only “transitory” and that there was nothing to be worried about.
Of course, they were dead wrong, and they knew it—they were gaslighting.
The truth is that inflation is out of control, and nothing can stop it.
Even according to the government’s own crooked CPI statistics, which understates reality, inflation is rising. That means the actual situation is much worse.
Recently the core CPI hit a 40-year high.
I wouldn’t be surprised to see the CPI exceed its previous highs in the early 1980s as the situation gets out of control. After all, the money printing going on right now is orders of magnitude greater than it was then.
What will the Fed do when it can no longer maintain the charade that inflation is under control?
That is the $64,000 question.
Editor’s Note: The Fed has already pumped enormous distortions into the economy and inflated an “everything bubble.” The next round of money printing is likely to bring the situation to a breaking point.
If you want to navigate the complicated economic and political situation that is unfolding, then you need to see this newly released video from Doug Casey and his team.
In it, Doug reveals what you need to know, and how these dangerous times could impact your wealth.