Gold Surge Shows Why Trump Will Beat Powell’s Fed

The Battle Over America’s Monetary Future: A Broken System and the Road to Reform

The Alarming State of America’s Central Banking Model

The Federal Reserve, under Chairman Jerome Powell, recently testified before Congress, addressing key issues such as inflation, interest rates, the Consumer Financial Protection Bureau, and cryptocurrency. However, beneath the surface of these routine discussions lies a far more critical problem: the entire model of American central banking is fundamentally broken. While Powell insists that there’s no urgency to cut interest rates, claiming inflation is under control, the reality paints a starkly different picture. The Fed, whether intentionally or not, is fueling inflation by ignoring critical market signals. Commodity prices have surged by over 20%, and gold is nearing $3,000 an ounce—clear indicators that the dollar is weakening, even if it appears strong compared to other struggling currencies. These warning signs are being blatantly disregarded, setting the stage for a potential economic storm.

The Two Faces of Inflation: Understanding the Fed’s Misdiagnosis

At the heart of the Fed’s policy failure is a fundamental misunderstanding of inflation. There are two distinct types of inflation: non-monetary and monetary. Non-monetary inflation is driven by external factors, such as supply chain disruptions or natural disasters. For example, the bird flu’s impact on egg prices is a classic case of non-monetary inflation—no amount of interest rate manipulation can produce more chickens or eggs. The second type, monetary inflation, is far more insidious. It occurs when the value of the currency is eroded through excessive money creation, a direct result of central bank policies. The Fed’s current approach fails to distinguish between these two types, focusing instead on outdated models that ignore the root causes of monetary instability.

Ignoring the Red Flags: Why the Fed’s Approach Is Misguided

The Fed’s insistence on relying on lagging indicators like unemployment rates and consumer price indices has led to a catastrophic oversight of critical market signals. Commodity prices and gold are two of the most reliable indicators of monetary health, yet the Fed continues to dismiss their warning signs. The surge in commodity prices and the meteoric rise of gold are not random fluctuations—they are the market’s way of signaling that the dollar is losing value, even if it appears strong relative to other currencies. This is akin to a baseball player with a .200 batting average leading the league—technically in first place, but hardly a cause for celebration. By ignoring these signals, the Fed is setting the stage for a monetary crisis of unprecedented proportions.

The Phillips Curve: An Outdated Theory Guiding Modern Policy

One of the most glaring issues with the Fed’s approach is its reliance on the Phillips Curve, an economic theory from the 1950s that posits a trade-off between inflation and unemployment. According to this theory, low unemployment must be accompanied by high inflation, and vice versa. However, recent economic history has repeatedly debunked this outdated model. The U.S. has experienced periods of both low unemployment and high inflation, a scenario the Phillips Curve deemed impossible. Despite this, the Fed continues to cling to this failed theory, using it to justify policies that are no longer relevant in the modern economy. This stubborn adherence to outdated ideas has led to a series of policy mistakes that are exacerbating the current economic instability.

The Inevitable Showdown: White House vs. Federal Reserve

A confrontation between the White House and the Federal Reserve is not just likely—it’s inevitable. Contrary to popular belief, the President holds more power in this relationship than many realize. The Fed, despite its pretensions of independence, is ultimately a creature of Congress. History has shown that in direct confrontations with the White House, the Fed typically yields. The Treasury-Fed Accord of 1951 is a prime example of how such power struggles have been resolved in the past. As the Fed’s policy failures become more apparent, the stage is set for a similar showdown. Investors and citizens alike must prepare for the turbulence that will accompany this battle, as the outcome will have far-reaching implications for the future of America’s monetary system.

The Path Forward: Restoring Stability to the Dollar

The solution to the Fed’s current woes is remarkably straightforward: it must abandon its role as an economic puppet master and return to its core function as a guardian of currency stability. This means paying attention to real market signals, such as commodity prices and gold, rather than attempting to micromanage the economy through complex interest rate manipulations. The approach taken by former Fed Chairman Alan Greenspan in the 1990s, which focused on maintaining a stable dollar by monitoring these indicators, provides a blueprint for success. For those who argue that this approach is too simplistic, it’s worth remembering that complexity often masks incompetence. The Fed’s current policies have led to boom-bust cycles, currency instability, and persistent inflation. It’s time for a change.

The High Stakes: Prosperity, Savings, and Economic Freedom

The stakes in this battle could not be higher. America’s prosperity, savings, and economic freedom hang in the balance. The Fed’s fatal flaw is not just a technical error—it’s a fundamental misunderstanding of how free markets work. Until this misunderstanding is corrected, the consequences of its misguided policies will continue to be felt across the economy. Investors must brace themselves for the turbulence ahead, as the illusion of inflation control will eventually shatter. When it does, the real debate will not be about interest rates or political power plays—it will be about the very foundation of America’s monetary system. The time to act is now, before the damage becomes irreversible.