Loading ...Fed Chair Powell’s Track Record & Credibility Crisis: From “Transitory” to QE “Lite” in 3 Years … and what comes after!
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Jerome Powell thinks we are all fools. He believes he can stand at a podium, look the world in the eye, and tell us one thing while his hands are furiously doing the exact opposite.
Today, the Federal Reserve Chairman did it again. After the last FOMC meeting on October 29th, he explicitly stated that another rate cut was “not guaranteed.” In fact, his tone was so hawkish that odds of a 25 bps December rate cut (orange line) dropped to about 20% in the weeks that followed, before shooting up to over 80% in the last week or so, once the market realized it was only hollow rhetoric.
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Today, he cut rates by 25 basis points. This is the third consecutive cut, for a total of 75 basis points, each one preceded by hollow, hawkish rhetoric that fizzled within weeks.
But the rate cut isn’t the real story. The bombshell, the admission of defeat, the signal that the endgame has truly begun, was buried in the fine print. Powell announced that the Fed will begin a new program of “QE Lite,” purchasing $40 billion in Treasury bills every month.
This announcement comes just ten days after the Fed officially ended its Quantitative Tightening (QT) program on December 1st.
Let that sink in. The Fed couldn’t even survive for two weeks without printing money. This is a stunning, panicked reversal. It is a public admission of the Fed’s complete impotence in the face of overwhelming debt and political pressure.
It is the most bullish signal for hard assets since the Fed’s infamous “transitory” inflation call of 2021.
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Powell’s words are now completely meaningless, a smokescreen of Fed-speak designed to obscure the ugly truth. He has been wrong about everything: the inflation spike, the stagflationary reality, and the path of rate cuts.
His credibility is not just zero; it is negative. The only rational way to interpret his statements at this point is to assume the opposite is true.
And his actions, the only thing that now matters, are screaming that a massive, full-blown QE program is not just possible, but inevitable.
The trend is our friend, and Jerome Powell, through his forced actions, has become the most bullish force on the planet for gold, silver, and the miners that pull them from the earth.
So, Let’s Dig Into The Following:
- Powell’s credibility chasm. | excerpt: “And all of that data will point to the same ugly reality: significant weakness in the economy. Consumer data, bankruptcy data, jobs data, manufacturing data, trucking data; all of it is flashing red.”
- The pivot that isn’t coming but is already here!
- Caught in a viscous circle without escape. | excerpt: “The previous rate cuts have done nothing to help the economy or stem the rise in joblessness. The economy is faltering hard, and the consumer is buckling under the weight of persistent inflation and job insecurity.”
- The inescapable forces that are forcing the Fed’s hand!
- The perfect storm for the miners! | excerpt: “This creates a situation of massively expanding profit margins. The miners’ revenues are soaring as the price of their product goes up, while their costs are remaining flat or even declining. This is pure rocket fuel for their stock prices and that is still ahead of us.”…
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