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Fed's new Trump era

From Birch Gold Group

President Trump is poised to bring massive changes to U.S. monetary policy with his nominations to the Federal Reserve’s Board of Governors, along with his Fed chair nomination to replace Janet Yellen. But these changes could be problematic if your savings are caught unprepared.

Here’s what Americans should know to be ready…

Trump’s Chance to Shape the Fed

Every president gets the chance to influence Fed policy through nominations to the central bank’s Board of Governors. However, that chance is typically limited to a small handful of nominations — two or three maximum, including a nomination for Fed chair.

But President Trump is getting a much larger opportunity to influence the Fed with his nominations. In addition to his upcoming nomination to replace Fed chairwoman Janet Yellen, Trump will also appoint four new members to the Fed’s Board of Governors.

All said, that means Trump will appoint five of the seven total members on the Fed’s governing board before the end of his first year in office. The last time a president had this much power over the Fed was nearly 100 years ago during the Woodrow Wilson administration.

But who will Trump nominate? Here’s what we know about his potential picks (and their policy leanings) so far…

Trump Picks to Bring Next Inflationary Cycle?

According to multiple sources, Kevin Warsh is currently the obvious frontrunner as Trump’s replacement for Fed chair Janet Yellen. And if Warsh does end up leading the Fed, it’s safe to say he’ll have a heavy hand in the rest of Trump’s central bank nominations.

Here’s why that’s important: Warsh reportedly holds a more “pragmatic” view in respect to continuing the easy monetary policy we’ve been struggling to pull ourselves out of for the past couple years. Instead of risking the consequences of tightening policy into economic weakness — which the Fed has attempted and failed at in recent months — Warsh would likely return us to the realm of near-zero rates and Quantitative Easing (QE).

That said, a new team of Fed officials with a penchant for easy monetary policy would only mean one thing… the beginning of our next major inflationary cycle.

Here are three reasons why we should expect Trump’s picks to spark a new period of strong inflation:

1) National Debt – U.S. lawmakers have one big, obvious reason to want a significant uptick in inflation, and that’s the national debt. Inflation helps the government service its debt around the world. And considering our current debt-to-GDP ratio is over 105%, it’s no surprise politicians are pushing to stack the Fed with pro-inflationary officials.
2) Trump’s Personal Agenda – After criticizing Yellen and her policy decisions throughout his campaign, Trump has now gone on record saying he thinks the dollar is “too strong” and that he’s a “low interest rate person” like Yellen herself.
3) Failed Fed Strategy – The Fed has already tried to pull back on its easing policies from our last crisis, by “normalizing” interest rate policy and unwinding the Fed balance sheet (which is grossly inflated as a result of massive QE). But the economy isn’t responding as planned. Trump’s new Fed officials will likely abandon normalization — regardless of how necessary it is for long-term economic viability — in favor of predictable, easy monetary policy that will skyrocket inflation.

Preparing Your Savings

So what should Americans do to prepare their savings before Trump’s new Fed nominations set off a new round of inflationary policies?

Investing in the market carries excessive risk, while “safer” investments offer paltry returns. And leaving your savings in cash simply guarantees the erosion of your spending power.

But one asset gives you a way out: physical precious metals.

Precious metals like gold, silver, and platinum thrive during times of major inflation. And owning these metals ahead of Trump’s big Fed regime change could be an extremely wise decision.

Economic forecaster Jim Rickards explains what likely lies ahead, and why owners of gold and other metals will benefit:

“You should expect lower real rates, slower balance sheet normalization and higher inflation than markets are now pricing. This will not happen all at once, but in stages over the next year. The biggest winner will be gold. The time to enter your gold position, if you don’t already have one, is now.

  • Knowledge Transfer

    What stops the government from confiscating gold?

  • Jefe Gordo

    Nothing. FDR in 1933 by EXECUTIVE ORDER (The stroke of his pen ( Made it a felony for an American to own gold. You were obliged by threat of a prison sentence to sell your gold to the U S Treasury for $20 per ounce, He put it in Fort Knox and then in 1934 decreed it was worth $35 per ounce. Keep in in Bullion ( not paper) and overseas to be safe

  • Lodewijk Hof

    Why not simply abolish the private owned FED? It’s time for a common sense economic policy and a currency backed by gold

  • Ronald West

    Who cares? Only an idiot would give up their gold. You bought and paid for it. It’s yours. They can only take it if they know you have it. So if you own counterfeit paper gold which has a paper trail and is legally owned by a bank, therefore trackable, sell it now and buy physical gold for cash and bury it or store it in the Caymans or Switzerland. Problem solved.

  • Knowledge Transfer

    Why didn’t that work under FDR in 1935?

  • Tom Tom

    because that won’t happen.

  • Tom Tom

    nobody

  • Tom Tom

    “A myth has gained credence over the years that the IRS executed a nationwide search of safe deposit boxes as part of the government’s “confiscation policy”. The myth is supported by reference to portions of E.O. 6102. I’ve reviewed 6102, and the language cited by the mythmakers is not in the original. Moreover, there are no contemporary accounts of such searches and seizures. It’s hard to imagine they would have escaped press attention.

    However, there are a few cases in which gold was, in fact, confiscated (without compensation). As far as I’ve been able to determine, all of these confiscations came as a result of criminal prosecution of people who had violated federal law. There was no widespread prosecution of individuals who simply owned gold. The cases brought by the government were typically against gold traders, dealers, and companies that failed to surrender large quantities of gold.”

    https://www.usmoneyreserve.com/blog/did-fdr-confiscate-americans-gold-in-1933/

  • Ronald West

    I don’t know that it didn’t work in 1935. If you travel back to 1935, you will find that things were a lot different back then. Firstly, the US government as a rule, did not steal from the people as much and as a result, people trusted and obeyed their government a lot more. Secondly, the people always rallied around their president, no matter who they voted for. There was no “not my president” mentality, so many people blindly did what the president asked. Thirdly, Most people did not turn in their gold anyway, and to my knowledge, not one person was fined or jailed. Anyone who did turn in their gold was compensated at the official gold price of $20.67, so the gold confiscation was not a theft. It was just sleazy that FDR later devalued the dollar by raising the official gold price to $35, so in that sense, he stole the capital gain from the people. The other side of that however, is that the depression was raging and deflation was in full swing, which means that the US dollar was gathering strength daily, so the $20.67 (in dollars) they got for the gold, was gaining in value. Fourthly, The main tax haven at the time was Switzerland, and a Swiss account was very costly to open and maintain. Still is. Finally, the main reason for the gold round-up was that FDR could not simply print up the money he needed for his spending package without having more gold, and he needed to print money to fight the depression. Today is a different scenario. The government is broke and will soon come for your cash first and later, when they get more desperate, they may come for your gold. Best to take steps to preserve your wealth from theft. Gold is one of a few things you can buy for cash and not report it. There is one other possibility. The 8133.5 tons of gold that the Fed says is in Fort Knox, is officially valued at $42.24 per oz from the Bretton-Woods agreement. The Treasury can, at anytime, mark-to-market, the book value of their gold to market price. If they do that, they will probably go the extra step and revalue gold for a gold-backing of a new currency of 40%. They would then need a gold price of $10,000 to compensate for all the world’s money printing since the days of when gold was $35 an oz. This is entirely possible because otherwise, the printing presses will continue to run and interest rates will stay at zero and the economies will continue to stagnate and deflation could even accelerate. Deflation is why gold is having a hard time at present. Devaluing the dollar against gold such that gold rises to $10,000 has a lot of benefits and can be accomplished without another gold confiscation.

  • Knowledge Transfer

    Inch by inch enslavement is a cinch. Big government is bad government. Bigger isn’t better. Better is better.

  • Knowledge Transfer

    I asked the question “what stops ” not “who can stop”. I’ll take “nobody” to mean “nothing”. And that is correct.