The Fed is really running out of firepower

BloombergOpinion/Bill Dudley/10-28-2020

“No central bank wants to admit that it’s out of firepower. Unfortunately, the U.S. Federal Reserve is very near that point. This means America’s future prosperity depends more than ever on the government’s spending plans — something the president and Congress must recognize.”

USAGOLD note:  One component in the problem now festering in financial markets is the virus itself.  A second is the Fed’s apparent inability to do much more than it already has. As we have said repeatedly throughout this latest chapter in the crisis, the Fed can set the stage for individuals and businesses to borrow money, but it cannot force them to take advantage. That brings us to the third, and perhaps most important component – a concern in the markets that the gridlock in Washington will extend into post-election political environment. In short, nothing gets done. This grouping of circumstances is probably why markets are reacting as they are at present, including gold – with a sense of fatigue and perhaps even lost hope. In our view, for better or worse, gold’s safe-haven allure will return to the forefront as the combination of potential realities settles in.

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