The U.S. Fed and other global central banks are in the process of easing monetary policies again. Although interest rates got nowhere near previous levels during the Fed’s recent tightening cycle, the central bank has decided that it is time to start cutting again. The Fed is not cutting from only 2.5% instead of 5.5%, however.
The ECB tomorrow will present its latest plans to boost the region’s economy which will likely include a bazooka of rate cuts and fresh QE. Other central banks are likely to follow suit.
There are a few issues with these plans for further easing.
A major problem is the fact that despite a decade of low rates, central banks have been unable to spur significant inflation. Price pressures have consistently been below the Fed’s desired target of 2% on an annualized basis, and the lack of inflation could point to economic weakness ahead.
In order to achieve higher inflation levels, the Fed and other central banks may have to get far more aggressive with monetary policies. This could include not only cutting rates back to zero or even into negative territory, but also further easing measures such as QE. Even these drastic measures may prove to be ineffective again, however, and central banks could be left with no other choice but to debase their currencies.
Once the currency debasement begins, bond yields will go lower-much lower. The situation could potentially turn into a full-blown currency war as countries then have to actively lower the value of their currencies to remain competitive in the global marketplace. Although such actions could potentially spur significant and rapid inflation, they would also present a number of problems.
As the race to the bottom continues, risk assets could potentially decline while hard assets like gold could shine.
Rapidly rising inflationary pressures would also present another compelling reason to buy and hold hard assets, and demand for such assets could go through the roof, pushing prices sharply higher in the process.
With the potential for the next major global recession on the rise and an increasing risk of a widespread central bank currency debasement, now is the time to get diversified with alternative asset classes that may potentially hold or increase in value. With unlimited upside price potential, a long history of reliability and its ability to act as a hedge against weaker currencies and higher inflation, there may be no better asset class to than hard, physical gold.
Adding this key asset class to your portfolio has never been easier, and perhaps never more important. Speak with an Advantage Gold account executive today about the potential benefits that gold may provide. Our associates are here to answer any questions you may have and can even show you how to build a significant allocation using the potential benefits of an IRA account.
Don’t wait for the next major stock market meltdown or for central banks to begin eroding currency values further. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: currency debasement, currency war, global marketplace, monetary policies, price pressure, rate cut