A Fatally Cornered Fed vs. Historically Honest Gold

Matterhorn Asset Management, AG partner, Matthew Piepenburg, sits down with David Lin of the David Lin Report to help end a number of false debates and narratives currently making the headlines.

Piepenburg begins by squarely addressing the so-called GDP “surge” in the U.S. as little more than a deficit-spending contradiction, as more debt-based “growth” is not genuine growth, but, well…just more debt. He depicts the simultaneous rise in yields, GDP, and deficits in the U.S. as resembling the profile of an emerging market nation rather than that of a leading developed economy. Piepenburg elaborates on how escalating yields and rates exacerbate the financial burden on consumers, as the concealed tax of substantially underreported inflation compounds the problem.

Turning to bonds, Piepenburg warns against the so-called lure of bond “value” and rising yields. He argues that stress in the bond market is far from over. The only way to support/lift sovereign bond prices and hence compress yields would and will require more magical Fed money, which means even a “saved” or rising bond market will be superficial, as such gains will be eaten away by debased money and rising inflation and negative real rates. In short: No easy way out of the Fed’s debt spiral. It’s either save the bonds or kill the currency, and the direction ahead, he argues, is historically clear.

With the Federal Reserve, led by Powell, advocating for higher rates while the Treasury Department, under Yellen, significantly increases public debt, Piepenburg sees the comical outcome as more debt incurred at higher costs and rates. This situation, he asserts, will necessitate further injections of inflationary liquidity to meet financial obligations. Ultimately, Powell's anti-inflation stance, in his view, will culminate in more inflation.

Piepenburg also addresses what he perceives as the misleading debate surrounding hard versus soft landings, asserting that the evidence of a severe economic downturn is unmistakably apparent. The conversation then turns to the reality rather than hype of de-dollarization, the questioned performance of gold vs. equities or other assets in an inflationary setting and the ultimate role of precious metals in far-sighted portfolios.