Taper? What taper?
Last week, the Fed announced that it plans to speed up the pace of its asset purchase taper. But so far, this taper hasn’t been very impressive. Between Dec. 8 and Dec. 15, the Fed added another 92.1 billion to its balance sheet, expanding it to a record $8.757 trillion.
If this is the taper, it’s the worst taper ever.
The trajectory of the balance sheet in the era of the taper looks a whole lot like the trajectory of the balance sheet before the era of the taper.
The perception is that the Fed has pivoted to fight inflation. But in reality, it is still throwing gasoline on the inflationary fire.
Here’s a question: if you’ve got a fire, wouldn’t you just stop pouring gasoline on it?
Of course, you would. You wouldn’t just gradually pour on less gas. You’d just stop.
The Fed isn’t stopping.
While it may be tapering its asset purchases to some degree, the balance sheet continues to expand. The Fed continues to print money. And as Peter Schiff said in a tweet:
You can’t fight inflation by creating more of it. Powell claims QE will end in March. I’ll believe it when I see it.”
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