The Fed is not going to hike rates, they're going to ramp up QE.

[Madison320]

It seems everyone in the mainstream financial world thinks the Fed is going to hike rates sooner than expected due to inflation concerns.

How many times will they be wrong before they figure out the Fed is not going to raise rates? They're not going to raise rates they're going to ramp up QE! Just wait until the 10 year gets to 2-3% and the markets start crashing. When that happens the Fed is guaranteed to start buying all those treasuries.

On a slightly different topic I've noticed that the total debt has only gone up by about 200B in Jan and Feb, but the total deficit was about 500B. Normally it's the reverse, the delta in total debt is a lot higher than the deficit. This is usually because they fudge the spending by not counting stuff that is off budget.

I heard that Yellen is reducing some account from about 1.5 T to .5 T. So my guess is they are drawing down some sort of cash fund so that they don't need to borrow as much over the next couple months. If I'm right the total debt will start exploding after that. Also that means that the recent rises in rates would be a lot higher if Yellen wasn't suppressing borrowing. Does anyone know if I'm right about this?

[Krugminator2]

I think the Fed will be reluctant to tighten if inflation runs at even 4%. I think they will call it make up inflation for running below 2% for so long.

M2 grew at 26% last year. M4 which apparently is a better metric grew at 28%. M2 is on pace to grow at well into double digits this year. So far markets aren't sending a clear inflation signal. Been wrong on soybeans, oats, and silver. I did just buy some palladium tonight. Maybe I am stubborn but really think inflation is going to be a thing and I think the Fed will be slow to do anything about it.

[oyarde]

I knew the fed would not raise rates and they dont really care about runaway inflation . It would be totally out of hand before they started to try and fix it .

[Madison320]

I knew the fed would not raise rates and they dont really care about runaway inflation . It would be totally out of hand before they started to try and fix it .

Yeah, I agree. They'll eventually try to fix it when it becomes a crisis.

There's a saying that is really accurate in this case. "Change happens when the pain of staying the same is greater than the pain of change."

My guess is the pain of high inflation will be BY FAR the number one problem in the near future. At that point the Fed will finally do the right thing and seriously tighten monetary policy, even if it sends us into a depression. We may already be in a depression from the high inflation so it won't matter much.

[Madison320]

I think the Fed will be reluctant to tighten if inflation runs at even 4%. I think they will call it make up inflation for running below 2% for so long.

M2 grew at 26% last year. M4 which apparently is a better metric grew at 28%. M2 is on pace to grow at well into double digits this year. So far markets aren't sending a clear inflation signal. Been wrong on soybeans, oats, and silver. I did just buy some palladium tonight. Maybe I am stubborn but really think inflation is going to be a thing and I think the Fed will be slow to do anything about it.

Give it some time! You seem to be a very short term in your investment strategy. In my opinion short term trading only works for top end professionals. Like trying to make money gambling in vegas.

[Krugminator2]

Give it some time! You seem to be a very short term in your investment strategy. In my opinion short term trading only works for top end professionals. Like trying to make money gambling in vegas.

My opinions are often/usually wrong. The market is always right. Almost never makes sense to have a losing position for more than a day or two. Never makes sense to own something like gold under than 200 day moving average for more than a short term trade.

[Madison320]

My opinions are often/usually wrong. The market is always right. Almost never makes sense to have a losing position for more than a day or two. Never makes sense to own something like gold under than 200 day moving average for more than a short term trade.

I haven't changed my strategy much since 2008. I've got a little gold and silver, some mining stocks, some oil stocks, manufacturing, anything that pays a high dividend and actually makes a real product. Mostly foreign companies. I feel like I'm doing pretty well considering the inflation play hasn't materialized much yet. I could've made more if I invested in Tesla, Amazon and Bitcoin but those bubble stocks scare me too much. The way I look at it if I'm wrong and we can print our way to prosperity, I'll still have made some money and I'll get a nice social security check and other benefits like medicare. In other words I think US citizens should factor in US retirement benefits into their investment strategy, if that makes any sense. It's like by default, before you've even invested anything, you own a big chunk of the US in your portfolio. If you want to hedge your risk it doesn't make sense to go all in on the US when you've already got those benefits as a US citizen.

[oyarde]

It is really time for Gold to break free of the feds moves on these 10 yr notes . Ten yrs at 1.6 is ridiculous . Gold should be 2K easily since it isnt it easily has 13 percent upside during the next 4 yrs. Silver is already disconnected from the paper share price with a silver eagle price to dealers at 34 1/2 with a 500 quantity purchase pushing retail to 38/39 or . I'm not really expecting Eagles to be cheaper than that the remainder of this calendar yr.

[Madison320]

It is really time for Gold to break free of the feds moves on these 10 yr notes . Ten yrs at 1.6 is ridiculous . Gold should be 2K easily since it isnt it easily has 13 percent upside during the next 4 yrs. Silver is already disconnected from the paper share price with a silver eagle price to dealers at 34 1/2 with a 500 quantity purchase pushing retail to 38/39 or . I'm not really expecting Eagles to be cheaper than that the remainder of this calendar yr.

I'm not worried unless the US govt suddenly decides to dramatically cut spending (ha! ha!).

I tend to look more at commodity prices in general. To me that's the most accurate indicator of price inflation. We've been kinda stuck the last month at the same price, I think when we start to hit new highs in commodities, like copper, wheat, corn, etc, that's when it'll get interesting. I think gold will go up when price inflation starts to become obvious.

As I said before it seems like the amount we've been borrowing is lower than the deficits and I think it's because Yellen is drawing down cash reserves. If that's true treasury rates should start to skyrocket when that cash runs out.

[oyarde]

I'm not worried unless the US govt suddenly decides to dramatically cut spending (ha! ha!).

I tend to look more at commodity prices in general. To me that's the most accurate indicator of price inflation. We've been kinda stuck the last month at the same price, I think when we start to hit new highs in commodities, like copper, wheat, corn, etc, that's when it'll get interesting. I think gold will go up when price inflation starts to become obvious.

As I said before it seems like the amount we've been borrowing is lower than the deficits and I think it's because Yellen is drawing down cash reserves. If that's true treasury rates should start to skyrocket when that cash runs out.

They are beginning work now on three more trillion of climate and infrastructure that will push the debt to 33/34 trillion.

[Krugminator2]

I tend to look more at commodity prices in general. To me that's the most accurate indicator of price inflation. We've been kinda stuck the last month at the same price, I think when we start to hit new highs in commodities, like copper, wheat, corn, etc, that's when it'll get interesting. I think gold will go up when price inflation starts to become obvious.

It will be interesting to see how commodities play out. If you have 3 or 4% productivity growth and M2 has increased by 30% over a 12-14 month period, it would seem that would be good for commodities.

Worth considering even at the start of the year.
https://www.washingtonpost.com/busin...y.html?amp;amp
https://www.reuters.com/article/pall...-idUSL1N2KG11I

Then you had the largest palladium mines in the world get flooded

https://www.bloomberg.com/news/artic...n-water-inflow
https://www.reuters.com/article/russia-norilsknickel/russias-nornickel-can-restore-water-hit-mines-but-unclear-when-experts-idUSL5N2L01E4

https://www.kitco.com/news/2021-03-1...-flooding.html


And it is interesting how states just passing laws because catalytic converter theft is so high
https://www.washingtonpost.com/world...e75_story.html
https://www.google.com/search?q=cata...hrome&ie=UTF-8

You have car production that should ramp up this year and use palladium as the public is sitting on record cash levels looks for something to do with it.

And you have prices breaking to 52 week highs while hedgers have close to their lowest short positions in history.
https://finviz.com/futures_charts.ashx?t=PA&p=m1

[ClaytonB]

Surprise! Printer go BRRRR!

[Snowball]

Rates will rise, not first by Fed hiking them, but by tapering purchases.
It has already started without either of those things occurring yet.

[Madison320]

Rates will rise, not first by Fed hiking them, but by tapering purchases.
It has already started without either of those things occurring yet.

You think the Fed is going to reduce it's balance sheet?

[TheTexan]

I think the Fed will be reluctant to tighten if inflation runs at even 4%. I think they will call it make up inflation for running below 2% for so long.

M2 grew at 26% last year. M4 which apparently is a better metric grew at 28%. M2 is on pace to grow at well into double digits this year. So far markets aren't sending a clear inflation signal. Been wrong on soybeans, oats, and silver. I did just buy some palladium tonight. Maybe I am stubborn but really think inflation is going to be a thing and I think the Fed will be slow to do anything about it.

I think the Fed would begin to panic if inflation runs at 4%. The only reason that inflation isn't at 100% right now is because the banks are keeping their trillions of reserves, in reserve. If inflation hits 4%, what incentive do the banks have to keep their reserves with the Fed? The Fed can't afford a 4% IOER.

[oyarde]

I think the Fed would begin to panic if inflation runs at 4%. The only reason that inflation isn't at 100% right now is because the banks are keeping their trillions of reserves, in reserve. If inflation hits 4%, what incentive do the banks have to keep their reserves with the Fed? The Fed can't afford a 4% IOER.

I dont think they'll even blink until ten yr treasuries are 3 1/2. They'll encourage trillions more in debt until then. Right now Gold should be 2K+ on the way to 5 after four yrs of pelosi-chumer-biden but it is 1711 . Fed is still buying 120 billion per month of supposedly mortgage backed securities . Whose checking on that ? LOL . Nobody.

[oyarde]

You think the Fed is going to reduce it's balance sheet?

I think they keep adding to it every month until they dont . Dont is not going to be soon .

[Madison320]

I dont think they'll even blink until ten yr treasuries are 3 1/2. They'll encourage trillions more in debt until then. Right now Gold should be 2K+ on the way to 5 after four yrs of pelosi-chumer-biden but it is 1711 . Fed is still buying 120 billion per month of supposedly mortgage backed securities . Whose checking on that ? LOL . Nobody.

The funny thing is that 120 billion a month is more than they were printing during QE1,2,3 and it's now considered to be in "pause" mode.

We're still stuck at 28 trillion in debt. It hasn't gone up in about 3 months despite the huge deficits. As I said before, I think it's because the treasury is using up it's cash reserves. When that runs out I think we might get bigger moves in the long term treasury rates because the borrowing will go way up.

[Snowball]

You think the Fed is going to reduce it's balance sheet?

They don't have to reduce their balance sheet in order for rates to rise, they only have to slow their purchases
or keep them as they are, not increasing them. I do agree that we cannot depend on them to do so, however.
This time, the Fed is not like it was in the past. They are really up front about taking over the country.

[Madison320]

They don't have to reduce their balance sheet in order for rates to rise, they only have to slow their purchases
or keep them as they are, not increasing them. I do agree that we cannot depend on them to do so, however.
This time, the Fed is not like it was in the past. They are really up front about taking over the country.

I agree. The funny thing is that the Fed lowers rates by printing money, which in the long run makes rates higher since it devalues the dollar. It's like dumping gas on a fire, at first the gas smothers the fire a little then it rages out of control.