This year was a doozy. Right out of the gate, millionaires were sounding the alarm that the markets were looking overvalued while reducing their risk exposure.
In February we got a taste of what could be the “end game” for the U.S. dollar as we saw it lose more of its grip as global reserve currency. Of course, it won’t collapse overnight because market psychology is still propping it up (for now).
But three big major economic influences have made 2021 one to remember. This chaotic “trifecta of market turbulence” kept the media busy and retirement savers on the edge of their seats.
So without further ado, let’s dive into the first one…
The confused Fed
Back in 2019 when the repo markets started going crazy, we reported how the Fed’s “confused” response only added fuel to a fire that continued to burn into this year.
And this year, one word you might have heard coming from Powell’s mouth with nauseating frequency to describe rising inflation was “transitory.” Over and over again, Powell’s confused Fed kept downplaying inflation…
Until it was obvious to everybody that inflation wasn’t transitory any longer. When Senator Pat Toomey challenged Powell during an appearance before Congress, the Fed chairman was forced to change his tune:
Powell explained that while the word has “different meanings to different people,” the Federal Reserve “tend to use it to mean that it won’t leave a permanent mark in the form of higher inflation.
“I think it’s — it’s probably a good time to retire that word and try to explain more clearly what we mean,” Powell added.
(We’ll discuss this in greater detail in a moment.)
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