Energy & Capital: The U.S. Dollar Is FUBAR, Buy Gold

June 23, 2020

Article by Luke Burgess in Energy & Capital

The dollar bears and gold bugs are pouring a tall glass of "I told you so" right now. Because the U.S. dollar is in big trouble.

The fact is, there have been big problems with the greenback for years. And the economic fallout from the COVID-19 pandemic might be the last straw.

On Friday Boston Fed President Eric Rosengren said continued fiscal and monetary support will likely be needed to address the ongoing spread of COVID-19, which could lead to further shut-downs in the U.S. and a slower economic recovery than expected.

In a virtual conference Rosengren stated Friday, “This lack of containment could ultimately lead to a need for more prolonged shut-downs, which result in reduced consumption and investment, and higher unemployment.”

The Federal Reserve has already intervened with monetary support to help curb the economic damage from the COVID pandemic –– including emergency rate cuts down to 0% to 0.25% and creating trillions of new dollars for lending.

In the nine weeks between March 9 and May 11, the Federal Reserve added $2.3 trillion dollars to the money supply, as measured by M2.

$2.3 trillion dollars in nine weeks! The Fed was creating over $425,000 in new money every second!

The Fed's response to the COVID-19 pandemic has already sparked concern over the future of the U.S. Dollar. Concerns range from too much inflation to the end of the greenback's status as the world's main reserve currency. Yale economist Stephen Roach writes: “The Era of the U.S. Dollar’s 'Exorbitant Privilege' as the World’s Primary Reserve Currency Is Coming to an End”

Any way you slice it, the future does look great for gold holders. High inflation or stagflation... USD reserve currency crisis... negative interest rates... any ....

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