The Fed is cutting rates as the economy weakens, the jobs picture deteriorates and inflation readings get closer to its 2% target… but this is no time to become complacent about long-term inflation risk.
In the early 1970s, an initial spike in inflation was brought under control but followed by two more inflation waves that reached even higher peaks.
With a major ratings agency reporting earlier this week that “U.S. fiscal strength will materially weaken” if we continue to go down the path of unchecked deficit spending, the United States faces structural inflation challenges.
Since year-end 2020, the purchasing power of the U.S. dollar has declined by approximately 20%. Consumers have endured an inflationary “burst,” as Fed Chair Jerome Powell recently put it, unlike anything experienced in decades.
Owners of stocks and real assets have actually benefited, in many cases substantially, while those who stored their savings in bank accounts and government bonds have suffered.
The global monetary system is rapidly changing as geopolitical interests drive emerging market economies away from U.S. Treasuries. Meanwhile, blockchain technology and digital assets are disrupting the traditional dollar-based financial system.
In the most recent 76report, we focus on the practicalities of using gold and cryptocurrencies like Bitcoin as diversification tools within your investment portfolio to help protect your savings from further purchasing power erosion.
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