As we enter 2024, the question of whether the US economy will fall into recession remains a concern for many Americans. Despite the mainstream media’s claims that the Federal Reserve has successfully avoided a recession, it may be too soon to celebrate.
The Fed’s recent meetings have failed to mention the possibility of a recession, which could be problematic for several reasons. First, the Fed might miss cues that the economy is heading into a recession. This wouldn’t be unusual, as Fed Chairman Ben Bernanke famously claimed in early 2008 that the US economy would stay out of recession, even though it had already entered one in December 2007.
The Fed’s track record on inflation is also concerning. Initially, we were told that inflation wouldn’t happen, then that it would be transitory, and finally that it wouldn’t be a problem. However, inflation has continued to rise, reaching over 9% year on year, the highest level in over 40 years.
If the Fed misses signs of a recession, any action taken to combat it may come too late and could potentially make the recession worse. The 2008 financial crisis caught the Fed off guard, and its response was unprecedented, cutting the target federal funds rate to zero and implementing quantitative easing (QE).
The Fed has yet to return to pre-crisis normalcy, and if the US economy falls into recession this year, we may see large interest rate cuts and massive QE once again. This could lead to a resurgence of inflation, especially if the Fed misreads the situation and overreacts.
The stagflation of the 1970s is something no one wants to see return, but Fed policy miscues could bring it back. If the Fed recreates the same monetary policy of the 1970s, jumping between tightening and loosening, a return to 1970s-style stagflation is not inconceivable.
The saying “Don’t fight the Fed” is a core investment edict on Wall Street, emphasizing the power of the Fed’s monetary policy in driving market outcomes. Currently, the Fed appears to be in a similar position as it was in 2007 and 2008, unaware of the dangers of the next recession and likely to cut rates into a recession.
While Wall Street may desire rate cuts and looser monetary policy, any upcoming rate cuts could be a harbinger of recession. As a result, now may be the time to start preparing for a potential recession.
Many Americans have already begun to protect their financial well-being by investing in precious metals like gold and silver. Whether through a gold IRA or purchasing gold and silver coins as a hedge against financial calamity, these metals can play an important role in protecting wealth.
If you’re concerned about the economy and don’t trust the Fed to manage a soft landing, it may be time to consider gold and silver.
Don’t let your hard-earned savings be decimated by a recession that many can already see coming.
Let us know what you think, please share your thoughts in the comments below.
