Four time best-selling author Jim Rickards says the Fed “throwing in the towel” on rate hikes is signaling a big problem for the economy. Rickards says, “The Fed was tightening to get ready for the next recession. . . . You need to cut interest rates somewhere between 4% and 5% to get out of a recession. How do you cut interest rates 4% if you are only at 2.25%? The answer is you can’t. You have to get to 4% before you can cut 4%, and that’s what the Fed was trying to do. . . . How do you raise rates in weakness to get ready for the next recession without causing the next recession that you are preparing to cure? That was the conundrum. I never thought they would get it right . . . and, as of now, it looks like they didn’t get it right. Meaning, they tightened so much to get ready for the next recession they slowed the economy.”
Rickards says, “Bernanke painted them into a corner, and they can’t get out. There is no escape from the room. By the way, one of the reasons gold is preforming so well, the Fed has proved that they can’t get out of this. They got into it, but they can’t get out of it because every time they try, they sink the stock market. They sink the housing market. They raise the specter of recession. They slow economic growth. They don’t want that. So, they sort of pause and maybe tiptoe back into it, but they really can’t get out of it.”
On gold, Rickards says, “People always say there is not enough gold to support commerce and trade and the money supply. I always remind them that is nonsense.
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