Fedâ€™s Inflation Efforts â€˜Likely to End Disastrouslyâ€™ Says Pomp
Anthony Pompliano said Bitcoin, stocks, gold, and real estate will run â€˜much, much higherâ€™ as the Fed inadvertently ramps up inflation.
Morgan Creekâ€™s Anthony â€œPompâ€� Pompliano says the Federal Reserveâ€™s attempts to control inflation are likely to end in disaster â€” which will benefit Bitcoin.
The Fed is currently completing an annual policy review and reportedly considering a plan to not raise interest rates until inflation hits 2%. In a Aug. 5 letter to subscribers titled The Wizards of The Federal Reserve Pomp said the Fedâ€™s efforts to ramp up inflation has put it â€œon a path that could end disastrously.â€�
He stated the nature of the U.S. economy means it is â€œnearly impossible to manipulate with nuanced controlâ€� and the central bank has a poor record with inflation targets over the years, having only â€œcome within +/- 10% of that target 3 of the last 10 years.â€�
He described a â€œworst case scenarioâ€� where the Federal Reserve overshoots their inflation target amid worsening economic problems and need to print more stimulus but canâ€™t raise interest rates quickly enough:
â€œIf that were to happen, the Federal Reserve would be accelerating inflation at the exact moment that they should be reigning it in. I wish that I could argue that this scenario would be hard to see coming, but rather I think it is actually likely.â€�
Anything but the dollar
Pomp encouraged investors to avoid hoarding cash as the Fedâ€™s efforts contribute to devaluing the dollar. The ICE U.S. Dollar Index, which measures the currency against six major rivals, fell 3.9% in July, from 97.2 to 93.3.
â€œMy anticipation is that real estate, gold, Bitcoin and stocks are all going to run much, much higher than they already have,â€� said Pomp. â€œBitcoin is going to be the largest winner out of all assets since it is the most volatile.â€�
Prices rising during pandemic
Despite the official inflation rate of roughly 1%, consumer prices across the United States are reportedly surging. The Bureau of Economic Analysis reported that from February to June, meat and poultry prices rose nearly 11% with the biggest price impact on beef and veal which have increased 20%.
The grocery store inflation comes at a bad time for millions of Americans, with the $600 boost to weekly unemployment payments expiring on July 31. Roughly 30 million Americans now collect an average of $1,284 every month instead of $3,684.
Democrats and Republicans are pushing their respective plans for stimulus packages, worth between $1 trillion to $3.4 trillion, with a resolution expected by Aug. 7.
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