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“True value is not in the dollars you have, but in what your dollars can buy.”
–Devlyn Steele, Augusta Precious Metals Lead Economic Analyst & Harvard Business School Analytics Program Member
Even if the assets you have in your savings go up in value by numbers of dollars, their practical value might not keep up with what the Fed has been doing to try to “fix” the economy before and during the COVID-19 pandemic. Some of the Fed’s unprecedented moves have taken us into “murky waters” where we’ve never been before. What does it all mean?
Devlyn Steele, Augusta Precious Metals lead economic analyst, covers this important question in this week’s Augusta Touchpoint Update video. In effect, Devlyn explains, the Federal Reserve is creating money out of thin air – and they’ve done it so much that even the experts are losing count. Larry Kudlow, Director of the National Economic Council, recently said, by his accounting, 3 million dollars has been pumped into the economy in congressional stimulus and 4 to 6 trillion dollars in Fed injections – but he doesn’t know for sure!
“Imagine that so many dollars are being created, the Director of the National Economic Council can’t even keep track!” Devlyn says. And it’s expected to keep going. Where will it stop?
The Fed is supposed to be a lender of last resort – but the institution has gone way beyond that with a long list of programs they’ve instigated to prop up the economy. Because the latest programs take us all into new ground, no one really knows what’s going to happen next.
One of the most worrisome moves is zero percent interest. As Devlyn explains, zero interest means money is essentially free, and there are many problems that go along with that. Another worry: In the coronavirus world, the government has lifted restrictions for banks that have committed fraud (Wells Fargo is the most notable one). And there’s more. Devlyn covers several of the most concerning Federal Reserve programs in the video.