If you’re one of those people who trusts that the people at the top know what they’re doing and have things under control, you might want to stop now, because it’s becoming abundantly clear that they don’t know what they’re doing. That’s particularly true within the Federal Reserve System, which is throwing unlimited amounts of money at the various economic problems occurring, without regard for what will happen once all that money enters the financial system.
Typical of the Fed’s blasé attitude toward monetary easing are comments from Minneapolis Fed President Neel Kashkari, who many may remember as being the administrator of the Treasury Department’s $700 billion bank bailout in 2008. Learning nothing from his experience back then, nor anything from the consequences of the Fed’s monetary policy response to the crisis, Kashkari believes that there isn’t any problem the Fed can’t paper over with newly-created money.
Reading about Kashkari’s advancement through the ranks at Goldman Sachs and at the Treasury Department, it’s clear that he’s the type of go-getter who thinks highly of himself and his abilities, and says what he needs to in order to impress higher-ups. But his worldview is as mainstream as it gets, formed by his schooling and his desire to impress his employers. Now that he’s in charge of the Minneapolis Fed, he seems to be clueless at how he comes across, particularly with his dangerous prescriptions for monetary policy.
Kashkari succeeded Narayana Kocherlakota as President of the Minneapolis Fed. Kocherlakota was known as being the most dovish of the Fed Presidents of his day. But Kashkari goes so far beyond Kocherlakota’s dovishness, you almost think you’re listening to a caricature. In a recent interview on 60 Minutes, Kashkari was asked if the Fed would just print money. His response: “That’s literally what Congress has told us to do. That’s the authority they have given us, to print money and provide liquidity into the financial system. We create it electronically and we can also print it, with the Treasury Department, so you can get money out of your ATMs.” He later stated: “We’re far from out of ammunition… your ATM is safe, your banks are safe. There’s an infinite amount of cash at the Federal Reserve.”
Apparently Kashkari never studied history, and particularly monetary history. And perhaps he was too busy bailing out banks in 2008 to pay attention to what was happening in Zimbabwe. Any time central banks have resorted to the power of the printing press to solve economic problems, and particularly to create an infinite amount of cash, it always ends badly. Yet Kashkari seems to believe that the Fed magically isn’t subject to the laws of economics, that it can do whatever it wants to and print money ad infinitum with no consequences. Yikes!
If you’re an investor reading Kashkari’s comments or watching his interview, your investments are in danger. The debasement of the dollar that will ensue once the Fed embarks on all-out monetization of debt will result in severe inflation, if not outright hyperinflation. Stocks and bonds will quickly become worthless, as will cash. Only gold, silver, and tangible assets will retain any value.
We all hope that Fed officials aren’t so cluelessly obtuse as to believe that they couldn’t usher in a hyperinflationary crisis. But millions of people around the world have hoped the same thing of their leaders and central bankers, only to be rewarded with the destruction of their currencies and their standard of living. Can you afford to trust that central bankers will exercise their power to create money responsibly, or will you take steps to protect your investments by investing in gold today?
This article was originally posted on Goldco.
