Inflation vs. Deflation


On Friday the Chairmen of the Federal Reserve, Jerome Powell, shared remarks on the Fed’s current economic outlook, while hinting at future monetary policy.



As I had explained in an earlier blog post, there is a hot debate over whether government and central bank policies are inflationary or deflationary.


Quantitative Easing (Q.E.) is when the Federal Reserve conducts open market operations by buying assets, such as government bonds, direct from broker dealers and/or banks.


Some argue these policies are responsible for red-hot inflation in markets, illustrated by record high stock and home prices.


Others would counter that by reducing the supply of government bonds it is more difficult for banks to lend, since regulations require banks to hold a ratio of these bonds against their loan portfolios.


When banks are less likely to lend, credit growth contracts, which eventually leads to recession.


Therefore, Q.E. is considered by some to be deflationary, which suggests why interest rates are still at all-time record lows despite the inflation narrative.


Regardless of which side of the debate you are on, the long-term economic impact of these financial experiments is unknown.


However, in just the past decade there has been ever-growing concentration of assets in the hands of the wealthiest 1%.



Keep in mind, the mastermind behind all this gear pulling and financial engineering is NOT part of the US Government.


The Fed, which is the U.S. Central Bank, is a private bank and no more “federal” than Federal Express (FedEx).


It makes you wonder if “they” are making these decisions in the best interest of the people, or instead for the benefit of its owners … which ironically are the world’s largest banks.


This misplaced power, and unfairly distributed wealth, may one day be what leads to the system’s failure.


Bitcoin was created as a potential solution to this centralized monetary regime and it’s popularity has risen dramatically in recent years … but that’s a topic I will be covering another time.


Share your thoughts on this topic in the comments below.


Then follow me on your favorite social media under the handle @JonKutsmeda for more conversations on similar topics..

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