Hey There Income Hunter,
Well, another day at the insane asylum.
J-Pow called for selling $2.5 to $3 trillion dollars worth of bonds into the market via the quantitative tightening (QT) facility. Meanwhile, the iShares 25+ Maturity Treasury Bond ETF (TLT) is already down 40% since the pandemic hit in early March.
Foreign investors have been selling their holdings to diversify into other currencies as the global structure transitions to a new monetary system.
The Fed has lost so much credibility in the past few months as everything they say is quickly fact tested and proven inaccurate.
Today, I’ll show you why J-Pow’s QT ploy is literally impossible …
Simply due to the position the Fed and the Banks have already put America in.
Live and Trade With Passion My Friends,
40 Years of Debt Accumulation
Just look at the gap between what we produce (GDP and money) versus our debt …
Now look at where it all began …
It all started after we (the US) defaulted on our promise to exchange our dollars in circulation for the gold we backed our currency with.
All fiat (paper) currencies in history have failed because politicians always take the easy way out to please voters.
And every president over the past 40 years has left office with more debt than when he entered.
Time to Pay the Piper
Here is a fact …
Every country since 1990 (18) that had debt over 120% greater than their GDP and a budget deficit over 10% of GDP defaulted on their debt payments.
Our government debt totals $32 trillion and that is borrowed via Treasury issuance of bonds …
The problem is we are competing with existing foriegn sellers as you can see in the chart below (red line)
Notice the down trend in foreign holdings since after the great financial crisis.
A New Monetary System
There was a lot of talk this week on a new basket-based international monetary system.
Not sure if it will gain traction, but the bottom line is the dollar’s role as the currency of the world is over …
This means the global structure is in transition and nations around the world will be selling their US bond holdings to buy alternative currencies for trade.
So, for Powell to sound as if he can just sell $1.5 to $2 trillion bonds while our economy is in recession is a joke.
This will just incent more foreign countries to liquidate their holdings.
So how you can get out ahead of this trend
Check this out from yesterday …
According to the World Gold Council, central banks see gold as a reserve asset and will likely increase their holdings of the metal in the next twelve months.
Gold is the only real money, everything else is a paper IOU.
The Fed has been doing all it can to hold down so the dollar stays strong. Why?
Because once the Fed admits it can’t stop inflation and is forced to go back to printing money, the dollar will trend down and gold will trend higher.
I think this trend will begin in the 3rd or 4th quarter of this year … And Power Gains has a strategy that will put you in position to capture one of the most important shifts in the markets in history.
Bring It Home
The dollar/gold shift is just one of the powerful changes we see coming …
There are three specific shifts that we are focused on and all will be ramping in the months ahead.
And simple option strategies will allow traders to be patient but be in the game to ensure they don’t have to chase it.
July will be the month that reveals how wrong the Fed is and the central bank will be forced to come clean.
And as always …
Live and Trade With passion My Friend,
Griff