blog.milesfranklin.com / By David Schectman / January 30th, 2013
If you ask John Williams, he will reply…
Lately, the big question affecting the price of gold is will the Fed continue QE or will they cut back, fearful of inflation? Inflation, by their definition is running around 2%. But, as you can see in the graph above, inflation is really running over 9%. Which inflation number are they afraid of? Since the beginning of the financial market turmoil in August 2007, the Federal Reserve’s balance sheet has grown in size and has changed in composition. Total assets of the Federal Reserve have increased significantly from $869 billion on August 8, 2007, to well over $2 trillion, much of it being near-worthless mortgage bonds. That is the engine of inflation and it is increasing to the tune of around $80 billion per month, as they continue to create new money, with the stroke of a keyboard, to purchase toxic mortgage bonds from the too-big-to-fail banks, and Treasuries on the open market.
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