Leeb: “The Fed is now talking about extending QE because they believe inflation has remained tame.  Well, that’s a shift because not too long ago they said they were going to cut back on QE and stop money printing altogether.

Now, all of the sudden, with America still not recovering the Fed is trying to boost the confidence of consumers once again.  It says that we are going to need a great deal of money printing, but the problem is the money isn’t going to do a lot of good for the economy. 

I also take issue with their theory that inflation is tame.  What they are saying about inflation is so disingenuous and I’m getting sick and tired of it.  I spent most of this weekend taking a look at what it costs the average family for necessities in this country.  In other words, food prices....

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“Yes, commodity prices such as corn and wheat have come down, but they are still two to three times their average prices from the 1990s.  What this means, Eric, is that the typical family of four was spending 22% of their income on food in the 1990s.  And remember, this is pre-tax income. 

But we are talking about the average family spending 22% of their pre-tax income on food in the 90s.  That same family of four is now spending very close to 30% of their pre-tax income on those same basic food necessities.  If something goes from 22% of your budget for something a family of four has to have (food), to nearly 30% of your budget, and the Fed is telling me their is no inflation, I’m telling you they are lying. 

We could also take a look at energy prices as well, which are a far greater expense for a family than what we saw in the 90s.  The point is, Eric, for the typical median family of four, when you take out those essentials there is almost nothing left over.  For the Fed to come along and say inflation is very low, that is a bold-face lie.

Now that the Fed has gotten the price of gold down they are saying no inflation, but inflation is still very high when you compare it to the 1990s.  If a family is at the 50th percentile or below they are having trouble feeding their family, paying for gas and driving their car.

So what we are doing today just isn’t working.  I think that gold is going to begin to reflect this big time.  You have to have physical gold here when you look at the plight of the average man and the continuation of money printing.  The Fed is simply not going to be able to hold back the price of gold.

At some point the actual inflation numbers will start to rise and you will really see gold’s 12-year bull market will really start to accelerate, and there will be nothing the Fed can do to stop it.  For the silver bulls, silver will act like gold on steroids as the metals surge higher.”

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

Dr. Stephen Leeb: Chairman & Chief Investment Officer of Leeb Capital Management and the

author of “Red Alert: How China's Growing Prosperity Threatens the American Way of Life”

Just released, to order from Amazon CLICK HERE.

The audio interviews with Gerald Celente, Andrew Maguire, William Kaye, Rick Rule, Nigel Farage, Dr. Paul Craig Roberts, John Embry, Art Cashin, John Mauldin and Egon von Greyerz are available now.  Also, be sure to hear the other recent KWN interviews which include Eric Sprott, Marc Faber and Felix Zulauf by CLICKING HERE.

Eric King

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