Despite Fed Chair Jerome Powell throwing cold water on the prospect of a quick economic recovery last week, there is still a lot of optimism out there. There is also an appalling lack of concern about all of the debt and money printing going on. In a recent podcast, Peter said nobody expects this to lead to an inflation crisis or a dollar collapse. But what can’t last forever won’t. And it won’t be a crisis — until it becomes one.
File this under another sign that we’re not in for a quick economic recovery. Another 3 million Americans filed for unemployment according to last week’s jobs report. Peter asked a pretty poignant question: if things were on the upswing, why would employers who have held on to workers this long let them go now?
They held off this long. Why are they still laying off so many workers? Clearly, employers are not sensing this huge recovery that’s around the corner, because if they did, they would be holding onto these workers. They wouldn’t be letting them go now after they kept them for these last couple of months. Obviously, if they’re laying them off now, they think this is going to be a much more protracted decline and therefore, we’re not going to get the back half of that V.”
Meanwhile, the Federal Reserve’s balance sheet swelled by another $212.8 billion to $6.934 trillion last week, as money supply surged another $198.6 billion. To put that into perspective, when the Fed did QE3 during the great recession, it was expanding the balance sheet by $80 billion a month. We just did over $212 billion in one week. The highest the Fed balance sheet got during the last crisis was $4.5 trillion. We’re now approaching $7 trillion with no end of QE in sight. Peter said this is inflation that is being generated on an unprecedented scale.
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