One of the defining characteristics of the modern era seems to be that states around the world see their citizens not as human beings but rather as resources to be used for the state’s benefit. The 20th century certainly demonstrated that, as tens of millions of people around the world were killed by their governments. But just because those awful days are behind us doesn’t mean that you or your wealth are completely safe from the depredations of government.
You and your wealth are a tempting target for governments that always are looking to spend more and more money. Outright expropriation of your assets is always possible, but isn’t likely to happen in the immediate future. Instead, the government will stealthily steal from you by devaluing the purchasing power of your assets through inflation.
What we’re seeing now is one of the greatest financial experiments in history, one in which you and your retirement savings are guinea pigs. And worst of all, you have no recourse if you lose your savings. Are you willing to leave your retirement savings at risk as the government continues its experiment?
Unprecedented Monetary Policy
The aftermath of the 2008 financial crisis saw an unprecedented injection of liquidity into the financial system, as central banks around the world engaged in quantitative easing (QE), pushing trillions of dollars of money created out of thin air into the economy. But because much of those injections was neutralized so as not to overheat the economy, the effect on price levels was relatively muted.
This time around the Federal Reserve has thrown caution to the wind and vowed to boost inflation to above its 2% target. It has nearly doubled the size of its balance sheet, going from around $4 trillion last year to nearly $8 trillion today. Money supply figures have grown exponentially as this new money circulates through the financial system, and will continue to grow as the effect of fiscal stimulus continues.
Companies throughout the economy are warning of cost increases as the prices of raw materials and economic inputs are rising around the world. And the worst part of this is that central bankers aren’t heeding the warnings and are intent on continuing their extraordinary and unprecedented monetary policy.
What the Fed’s Experiment Means
The Federal Reserve believes that it can print its way to monetary prosperity. We are in the midst of a great monetary experiment, one in which the Fed believes that by continuing to create trillions of dollars out of thin air it can induce economic growth.
The reality is that all of this money is creating inflation, and the American economy is at this point ill-prepared to face rising prices. With millions of Americans still out of work, millions more dependent on government handouts such as extended unemployment insurance, and American businesses indebted at their highest level ever, the US economy is not in sound shape. Additional pressure in the form of rising prices, which could dampen consumer spending and weigh heavily on already struggling households, is likely to lead to further weakening of the economy.
Don’t expect the Fed to acknowledge this, however. Now that the Fed has embarked on its monetary journey, it intends to stay the course. Even if it becomes plainly obvious that the Fed’s monetary policy is behind the rise in prices, it would likely take months for the Fed to acknowledge it, and more months before the Fed acted to roll back its inflationary policies.
Most analysts don’t expect the Fed to even consider raising interest rates until the end of 2022 or even into 2023. That means that if inflation starts to accelerate, it could take over a year for the Fed to try to counteract that. Can your investments afford that?
What the Future Holds
Now that Pandora’s box has been opened, it won’t be able to be closed. By enabling Congress’ fiscal stimulus packages over the past year, the Fed has shown that it is only too happy to work hand in hand with Congress to create trillions of dollars out of thin air. And now that Congress knows that it can pass $2 trillion stimulus packages and the Fed will cover for it, there is no practical limit on how much money Congress can spend.
Expect to see federal spending soar to ever higher levels, as President Biden and Democrats in Congress try to enact a laundry list of their favorite spending proposals. They think that they can spend money like crazy, get bailed out by the Fed, and that nothing bad will happen. In short, they think they’ve found the secret to creating prosperity by government fiat.
This is the experiment that is going on right now, and it will all end horribly. The federal government’s debt exceeds $28 trillion already, inflation is rising, millions of Americans are still out of work, yet the government continues to spend excessively. Before this is all over, we could see the national debt soar even further, inflation rise to levels last seen in the 1970s and ‘80s, and possibly even a financial crisis that would make 2008 look like nothing.
How You Can Protect Yourself
If you don’t want this grand monetary and fiscal experiment to wreak havoc on your retirement plans, now is the time to start protecting your savings. Once inflation begins to really pick up, time will become short and your options could be limited. Taking a defensive posture before a crisis is always preferable to waiting until you start losing tens of thousands of dollars.
Over the centuries, gold has been one of the most trusted assets when it comes to protecting against inflation and financial turmoil. It protected investors during the stagflation of the 1970s, it protected them in the aftermath of the 2008 financial crisis, and in all likelihood it will continue to protect them through the next crisis.
Investing in gold can be as simple as rolling over or transferring funds from your existing retirement accounts into a gold IRA. That gives you the same tax advantages as your current retirement accounts as well as the benefits of investing in physical gold coins or bars.
Don’t leave your retirement savings exposed to the whims of experimenting government officials any longer. Call the experts at Goldco today to find out how you can protect your retirement dreams with gold.