Financial Freefall
Financial Strategist: Federal Reserve Is In ‘Deep Trouble’ As It
Tries To Handle Inflation
By Ben Zeisloft
•
Jan 18, 2022 DailyWire.com
•
Odeon Capital Group chief financial strategist Dick Bove is warn-
ing that the Federal Reserve is in “deep trouble” as it attempts to
battle inflation.
Consumer prices rose by 7% between December 2020 and December of
2021 — the highest rate in roughly 40 years. In response, the central
bank is expected to hike interest rates three times in 2022 — and at
the end of last year, the Federal Reserve announced that it will
pursue a more rapid conclusion to their quantitative easing program
by slashing its monthly bond purchases.
During an interview with Fox Business anchor Maria Bartiromo,
however, Bove warned that “if the Federal Reserve was a private bank,
you would say this company is insolvent.”
“The reason why you would say that is because the Federal Re-
serve’s source of money — which comes from printing, it comes from
collecting money from the banks, you know, in reserves, comes from
a couple of other places — is in deep trouble,” he explained. “If you
would look at that balance sheet, you would realize that more than
100% of the increase in the Federal Reserve balance sheet, in the
last 12 months, has come from borrowing money in the reverse repo
market.”
“In other words,” he continued, “the Fed is sitting at borrowing
money at the shortest end of the curve in order to fund the purchase
of long-term Treasuries. The balance sheet is a disaster.”
Meanwhile, inflation continues to erode Americans’ purchasing
power. According to the Bureau of Labor Statistics, “real average
hourly earnings” decreased by 2.4% between Dec 2020 and Dec 2021.
Expressing concern over this reality, Sen. Rand Paul (R-KY) re-
leased a new report on Tuesday that details inflation’s impact on
American consumers and small businesses.
“$4.9 trillion in COVID-19 stimulus spending has led to one of
the highest and most sustained levels of inflation in U.S. history,”
the lawmaker said in a press release. “While government stimulus
spending was intended as a form of relief, and low and middle-income
families as well as small business owners were promised that their
taxes would not increase, Americans everywhere are now paying a hid-
den tax called inflation.”
Paul’s report said that inflation is primarily harming low-income
households:
71 percent of households making under $40,000 annually have in-
dicated economic hardships from rising prices, as opposed to just 29
percent of households making $100,000 or more.
Low and middle-income families spend a larger portion of their
income on high-inflation items, like gasoline, used cars, and food.
Families in the lowest income quartile spend nearly 40 percent of
their annual income on these three categories. As a means of compar-
ison, families in the top quartile spend only 10 percent of their
annual income on these categories.
The report added that small businesses are at a considerable
disadvantage in comparison to larger companies:
82 percent of small businesses reported raising prices in the
last several months, 42 percent reported raising prices by 20 per-
cent or more. 45 percent of small businesses reported taking out a
loan to cope with the pressures of inflation in this last year.
Large corporations have reported consistent profit margins.
Paul also pointed to Goldman Sachs’ 10,000 Small Businesses
project, which found that 86% of surveyed small business owners
“are concerned about inflation.”
*You know it is bad when the Dollar Store after decades doing
a thriving business announced that they will be setting their prices
at $1.25.
The Federal Reserve has now purchased $9T in securities that are
virtually worthless.
What have these people done to America?
Remember to pray for God to restore our land and have mercy and
grace on our people.
Conservatively,
John
Conservativelyjohn.com 