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Credit Bubble Bulletin/Doug Noland/7-17-2021
“Once our ‘activist’ central bank ventured into bolstering the securities markets and using unconventional measures to reflate the economy, it was going to be extremely difficult to refrain from venturing into all types of measures to support various groups and causes. Add QE to the toolkit, and it will become virtually impossible not to be compelled to allocate Fed money to satisfy political interests. After buying Trillions of Treasuries, supporting markets in MBS, muni bonds, corporate debt, ETFs and stocks was going to be inescapable.”
USAGOLD note: Noland takes us on a much-needed trek back to the basics in his latest weekly rendering. Washington might question and pressure the Fed at some level, but does it really in its heart of heart want the central bank to put the screws to inflation? Our guess is that it would scream even more loudly if that were the case. For its part, as we have said all along, the Fed finds itself between a rock and hard place on monetary policy, and perhaps both the markets and Capitol Hill sense its predicament.
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