Will US inflation pressures unsettle the Fed? - Financial Times

The Financial Times headline "Will US inflation pressures unsettle the Fed?" misses the point entirely. The question isn't whether inflation pressures will unsettle them, but whether they can be unsettled, or if they are simply choosing to let inflation run hot. For your stack, this means the continuous erosion of purchasing power is not an accident, but a feature of the current monetary policy, whether they admit it or not.

Recent CPI and PPI numbers have consistently outpaced the Fed's long-term 2% target, indicating these aren't just transitory bumps. The bond market is already flashing warnings, with yields reflecting a skepticism about the Fed's ability or willingness to rein in prices. When the market prices in higher inflation expectations, it’s effectively demanding more yield to compensate for future fiat depreciation. This is precisely why gold at 4523.2 and silver at 76.2 are responding. They are listening to the bond market's warning that the emperor has no clothes when it comes to preserving the dollar's value.

This isn't new territory. Historically, central banks facing a choice between economic growth (or perceived stability) and price stability often err on the side of expansion, leading to sustained inflationary periods. Think back to the 1970s. The Fed’s current rhetoric about achieving a "soft landing" while inflation persists is a tightrope act that rarely ends well for the currency. The real story everyone else is missing is that the Fed's "unsettlement" would actually mean they're considering tightening aggressively, which they have consistently demonstrated an aversion to, especially with the current debt loads.

For stackers, this prolonged inflationary environment is the ultimate validation. Physical demand, particularly for silver, remains robust, with reports of shortages in certain products indicating that the paper market often disconnects from reality. While the mainstream focuses on interest rate hikes or cuts, the underlying force driving physical metal acquisition is the direct, tangible loss of purchasing power in everyday goods. Your stack isn't just a speculative asset; it's a hedge against the very scenario playing out now, where the cost of living keeps climbing while nominal wages struggle to keep pace.

Watch the Fed's next public statements for any material shift in tone regarding their inflation outlook. Pay attention to how the bond market reacts to these statements, as it will be the most accurate barometer of investor confidence in the dollar's future purchasing power.