Is the Federal Reserve preparing to cut interest rates and in so doing spark a huge sell off in the US dollar? Is the Fed preparing to raise rates? Would this help stabilize the stock market and help keep our economy afloat?
The Federal Reserve and its policies will continue to affect the US dollar and the global stock market as Petro Dollars becomes devalued and assets are lost. However, at this point in time it is very difficult to determine how much of a direct impact the Federal Reserve is having on gold.
What now? Indeed the question is how can the markets stabilize in a situation like this. It’s too early to say exactly what will happen as the news from Washington is so varied.
The Dow Jones has already shown an increase after yesterday’s report that the Fed ended its quantitative easing program but gold prices were up for the day. The rising price is due to speculation by some investors that the Fed may not be able to follow through with ending its QE program.
Another reason why gold prices are increasing is because the stock market is seeing a significant devaluation of Petro Dollars. There is a possibility that the dollar will devalue further, but there is a strong argument to be made that the US Dollar and most all US Government debt will devalue if no intervention occurs.
How are we going to deal with a scenario such as this one? What now? It’s too early to tell.
Investment managers and hedge funds have been out of money making ventures and yet they are sitting back and waiting for action from the Fed. It makes sense, especially in a situation like this. We have the weak dollar, the weak dollar is causing inflation and asset values in the stock market.
What now? It is too early to tell if the Fed will be successful in stopping further depreciation of the USD, although this possibility has certainly been contemplated.
Can oil prices be controlled or will we be in a situation where the price will go up to break through the $100 mark, as it did in the middle of last year? The answer is not clear at this point in time, but the Federal Reserve has taken an “all or nothing” approach and it is looking like it will be “all or nothing” in this case as well.
How are we going to deal with a scenario such as this one? What now?
In this case the Federal Reserve has definitely chosen to be in “the do nothing” group by holding off intervention in the market and causing a devaluation of the US Dollar and Petro Dollars. This is their decision and it appears that it is working as they are at this point taking no chances of going off-script with interest rates and quantitative easing and other programs they are undertaking.
How are we going to deal with a scenario such as this one? It’s too early to tell, but it’s an area of discussion among many experts who have studied the market carefully.