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Alasdair Macleod: Too much liquidity inflates the everything bubble
By Alasdair Macleod
GoldMoney, St. Helier, Jersey, Channel Islands
Thursday, June 17, 2021
Yesterday the Federal Open Market Committee released its June statement, which only served to remind us that its members are powerless in the face of inflationary conditions. They refuse to accept the price consequences of monetary inflation, still clinging on to an increasingly untenable hope that price rises are "transitory."
... Dispatch continues below ...
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The fact of the matter is that the world is now awash with excess money, the two greatest inflationists being the Fed and the Bank of England. In the United States, the Fed's $120 billionn monthly quantitative easing continues to goose financial asset values, while the U.S. government has spent a further trillion into circulation from its general account at the Fed.
This tidal wave of money threatened money market funds totalling over $4 trillion with negative rates, thereby "breaking the buck," which is why the Fed has increased its outstanding reverse repos to $721 billion.
Interest rates will have to increase far earlier than the Fed admits if it would stop foreigners dumping dollars, not just for commodities, which have nearly doubled since March 2020, but for other currencies as well.
Welcome to the everything bubble, whipped up by American and British neo-Keynesian policy makers who are now increasingly cornered by their own monetary fallacies. ...
... For the remainder of the commentary:
https://www.goldmoney.com/research/goldmoney-insights/too-much-liquidity?gmrefcode=gata
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