Will the Fed's QE Cause a US Dollar Crisis?

The Fed claims inflation is too low. But in the US, inflation has become a political problem.


Food prices are soaring:



• Beef. The average retail cost of fresh beef last month was $5.28 a pound, up from $5.04 in January and the highest on records dating to 1987, according to the Agriculture Department and Sterling Marketing…



• Pork. Retail pork prices rose 6.8% in the past year to an average $3.73 a pound in February as beef shoppers turned to cheaper pork options…


• Poultry. More expensive beef and pork have prompted some shoppers to buy chicken and turkey. Poultry prices increased 4.7% last year, the Agriculture Department says…


• Milk. The average price of a gallon of milk was $3.56 last month, up from $3.46 in October…


• Fruits and vegetables. Unusually cold weather in California and a "citrus greening" disease in Florida have damaged citrus crops. Orange prices increased 3.4% last month, and strawberry prices are up 12% vs. a year ago.




As are rents:


According to the most recent Zillow report, Americans are spending the highest percentage of their income in 30 years on the rent check every month. Historically, the median household needed to spend a nationwide average of 24.5 percent (this includes utilities and additional costs) of their earnings to pay for rent at the median property level. Now, the share is 29.5 percent, a 19 percent jump from what it was between 1985 and 2000, before the housing market succumbed to bubble economics.




Moreover, healthcare costs have risen dramatically.


Put simply, the cost of living is soaring in the US.


The simple reason for this is due to the Fed printing money. Despite tapering the pace of its QE purchases, the Fed is still printing $55 billion per month, an annualized pace of $660 billion per year.


Moreover, the Fed’s balance sheet just cleared $4 trillion in December. To put this into perspective, if the Fed was a country, it’d be the fourth largest in the world. The Fed’s balance sheet is now larger than the UK, France, and even Germany. Only Japan, China and the US are larger.


Tapering is tightening of a sort, but the fact remains that the Fed continues to print billions of dollars. As the below chart shows, the US Dollar is on the ledge of a cliff.



A breakdown here would see us going to 74 very quickly.


Forget what the Fed claims, the markets are all showing clear indications of inflation.


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Best Regards


Phoenix Capital Research