WARNING: How The Federal Reserve Has Lit the Fuse That Will Very Likely Spike Major Price Inflation

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The Federal Reserve balance sheet turned up in September at the time of the spike in over-night interest rates. The Fed increased its balance sheet to reverse the interest rate climb. Since then the balance sheet has increased by $306 billion, or 8.13%, as the Federal Reserve has conducted repo operations almost daily to flood the system with overnight liquidity.

Austrian-lites, who panicked at that the time, and thought a recession was imminent, completely misunderstood the economics of the situation.

This Fed money pump, as I have explained in the EPJ Daily Alert, has derailed any chance of a recession in the near future.

But this Fed money pump is unlikely to not have consequences. The threat of a major escalation in price inflation is higher now than at any time since just before the Great Recession.

Consider yourself warned.

-RW