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Gold Spikes as the Fed Provides Target for Dollar Destruction

Today Michael Pento told King World News that QE3 has officially commenced. Pento, who founded Pento Portfolio Strategies, said the Fed is determined to continue its war against the middle class and savers by ramping up inflation. Pento had this to say about the situation: “The Fed has indicated that quantitative easing part three has commenced. As a part of the Fed’s own version of glasnost, Bernanke has sought to lift the veil on the sausage making behind the decisions reached by the FOMC. To that end, our central bank has disclosed they now have an inflation goal of at least two percent. Therefore, the plain and sad truth is that the Bernanke Fed has now provided the holders of U.S. dollars a target rate for its destruction.”

Michael Pento continues:

“The Fed’s preferred metric of inflation is the Core Rate of the Personal Consumption Expenditures Price Index (PCEPI). This index is now trending lower, falling to .8% in the fourth quarter, compared with an increase of 2% in Q3. Excluding food and energy prices, the core rate increased 1% in the fourth quarter, compared with an increase of 1.8% in the third. The Fed’s January statement acknowledged this by saying, ‘Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable.’ And in Bernanke’s press conference, the Fed Chairman stated that his inflation target may have to be breached until the unemployment rate falls saying, ‘…I think there are good reasons, from a dual mandate perspective, to have inflation greater than 2%.’

Since the Fed believes that inflation is headed south and perhaps below their inflation target, it seems logical to anticipate that Bernanke will take immediate action to defend that two percent inflation target....

Continue reading the KWN Michael Pento piece below...

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“The Fed Funds rate is already at zero percent, so the only way for the Fed can lower real interest rates is to increase the rate of inflation. They do this by creating more credit and purchasing more bank assets. Therefore, I expect a gradual increase in the size of the Fed’s balance sheet over the next few months.

It should be noted that the PCEPI is the most benign measurement of inflation the government compiles and is currently trailing the real rate of inflation, experienced by consumers, by about five percent.

Of course, the idea that the ‘stewards’ of our currency would set a minimum rate for its collapse is abhorrent. It’s sort of like the Department of Homeland Security setting a quota for the number of terrorist attacks. Not only did Mr. Bernanke opt for an inflation target, but he also pushed out the timeframe for the first rate hike until the end of 2014.

The Fed is completely convinced that without an inexorably rising rate of inflation, there won’t be enough money made available to finance our rapidly increasing national debt. As a result, we are stuck with a perpetually decreasing standard of living and a middle class that is on the endangered species list. Creating more inflation is now the official policy of the Fed. Bernake’s actions are so destructive to savers that I’m sure if he were a broker, he would be telling his clients to buy more gold.”

To Learn more about Michael Pento’s financial management services CLICK HERE.

Eric King

KingWorldNews.com

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