Jan Nieuwenhuijs: Why yield curve control by the Fed will be bullish for gold

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By Jan Nieuwenhuijs
Voima Gold, Helsinki, Finland
Saturday, June 13, 2020

On Wednesday, Fed Chair Jerome Powell stated he is considering “yield curve control.” Previously, in the 1940s, when the Federal Reserve controlled the yield curve, it created deeply negative real interest rates. If repeated today, this would cause the gold price to sky-rocket.

Due to the current economic crisis, the U.S. federal deficit is reaching "unprecedented" levels. Preliminary data suggests the federal deficit will be $4 trillion dollars this year, which is more than 15% of GDP. Although, as the crisis unravels, it's likely these numbers will be even worse by year end. Throughout history, only in the First and Second World War deficits of this magnitude have occurred.

... Dispatch continues below ...


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As GDP is declining and the federal deficit rising, the “public debt to GDP ratio” is escalating rapidly. According to usdebtclock.org, U.S. public debt to GDP is 130% at the time of writing. Just a few months ago this ratio printed 110%. In the chart below, you can see public debt to GDP rising at a pace comparable to when the Second World War broke out.

... For the remainder of the analysis:

https://www.voimagold.com/insight/why-yield-curve-control-by-the-fed-wil...

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