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Are We Getting “Fed Up”
Written by Steve | Published: |
Last week I was doing some research on what the Fed is currently doing and I decided to zoom out a bit and look at a more macro trend.
The chart below shows the total assets the Fed has put on their balance sheet. Essentially printing money and buying up assets. (*Note this is in millions so it’s just over $8 Trillion currently)
You will see a large spike up after 2008 and a huge spike going vertical after the covid crash.
They have said that they are slowing the balance sheet growth but it looks like they are just humoring us because it’s spiking up again.
Now one more nerdy chart for you.
This is the M2 money supply. You can see how dramatically it has risen since we went to a full fiat system when we came off the gold standard in 1971. Currently at over $21 Trillion.
So the question is what happens to your personal retirement account while all this is going on?
If you consistently have good assets that only go up in value (never lose) with no fees attached then you might be able to hang onto the coattails of all the Fed manipulation.
However, if your accounts are going down while more printing happens at the same time (inflation) your personal purchasing power is dropping like an anchor being dropped into the sea.
One of the first assessments you need to take as you review your account is how much downward pressure is my total portfolio exposed to?
Last month I had a call with a fine gentleman, he was paying a “big box” firm handsomely to manage his money but as we talked through it they weren’t really implementing any strategies to reduce risk of loss. Just reallocating from equities to bonds is not going to do it especially in a rising interest rate environment where bond values are decreasing.
There is a better way but it’s a process and it takes an open mind to learn and understand what you are really up against and how to come out victorious.