What the FED’s New Playbook to Fight Inequality Means for Gold

The Spotlight

1 minute read

Sep 11, 2020

City street on fire caused by civil unrest that could intensify amid economic turmoil during which gold prices increase and investors buy gold as safe-haven asset.

There’s always this one famous safe-haven asset you can turn to when the Fed and its reckless money printing are on the road to creating more income inequality and social unrest.

"Wait, what do you mean by the Fed new playbook to fight inequality?"

Good question, reader. We wanted to see if you were paying attention.

Because, yes, that's not exactly what the Fed seemed to have in mind when it rolled out its latest playbook.

Let's unpack.

Last week, Jerome Powell, the U.S. Federal Reserve chairman, outlined the focus of his revised mandate:

  • Do whatever it takes to fight deflation.
  • Do whatever it takes to fight unemployment.

Now, let's focus on the first one.

Nothing new in their playbook: the Fed is already creating an ungodly amount of money and clearly plans on continuing.

What's the issue, then?

The issue is that this strategy is already increasing inequalities between those with assets that will inflate thanks to money-printing, and those without such assets.

Just watching the Forbes billionaires list soar while the rest of the economy is tanking is a clear enough indication that something is up.

So, if we accept the axiom that income inequality will most likely be a side effect of the Fed strategy, we are in for a bumpy road.

Because, as you know, income inequality is one of the principal factors driving civil and social unrest.

And with all that is currently happening in the streets throughout the U.S., one can easily imagine social and civil unrest intensifying as the Fed keeps expanding its balance sheet.

"But what does that mean for gold then?"

Good question, again. Here is a hint:

What famous yellow asset is historically known to see its price increase in periods of money-printing combined with social and economic turmoil?


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