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Pento Portfolio Strategies President Michael Pento on the impact of Federal Reserve policies on the economy.
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-- money manager Michael -- tell how it's gonna follow that right I'm sorry about your problems in this inflation disconnect try and hollow out I don't know about a half -- -- onboard and predate -- -- Maybe Dave I'll -- rumpled but isn't it boys to the concerns of a lot of Americans out there right now it we get so many emails from people saying.
There's no inflation I go to the grocery store food it's twice what it was I'm paying so much for gasoline.
I mean people are so frustrated explain it to us where's the disconnect that's -- -- the voice of the middle class unfortunately for deep in the middle class and the poor.
We have a Federal Reserve Chairman.
Who absolutely has a wage the war against the middle -- He doesn't know anything about what causes inflation he doesn't know how to measure inflation and that's why he's got it all wrong.
Gas prices are up 30%.
In the last 24 -- food at home.
Up 6%.
Import prices up 8% it is crushing the middle class.
And that's what -- talking about he's got my vote like that guy and Michael -- and the reason why a lot of people blame the Fed is because they say that there monetizing the debt that they are lowering interest rates so low.
So that the Fed can go out and borrow money and they can borrow and pay down the debt but at the same time it's devaluing our money it's causing inflation right well Bernanke.
Had the temerity.
-- hubris to say that the Federal Reserve does not create money.
So he has like I said no idea -- what he's doing the Federal Reserve creates credit.
Credit that is used to create a bubble in the treasury market.
They create money yet -- thin -- in the form of credit by treasury bonds until the yield goes to zero.
The yield on treasuries -- and they'll overnight Fed Funds rate is gonna be at 0% Melissa for what's -- to be the better part of six years.
Now a 1% Fed Funds rate the overnight lending right they rate between banks.
Was at 1% -- year and a half and that engendered the housing bubble.
Now the Federal Reserve is engineering a huge bubble in the bond market.
Setting up the economy for an interest rate shock -- all -- Greece but Michael can you draw a direct line from what you just said to what date the -- complaining about okay so when your currency is losing power.
You have no more faith in your -- dollars.
To hold purchasing power what do you do Melissa you run off and by what.
-- Copper base metals oil as a substitute for money these are real.
Physical assets that maintain their purchasing power so what happens when you -- out by oil.
And gold the cost of everything that you produce goes up and that's why the Fed is looking at the -- metric which by the way.
Was was pressed down for many many years because of the housing crisis -- 40% of core inflation.
Of of core CPI course PPI is owner's equivalent rent that is now rising quickly.
And and you could you -- prices now north of a hundred dollars a barrel rising fast so you gonna.
I have a rise not only in the overall headline but -- -- as well Bernanke is worried about reflation because he's trying to bail out banks.
He doesn't care about the middle class he's killing them.
It's a mess but we got to go thanks for thanks for at least laying it out -- -- I'm not sure cleaned it up but we know what the -- is all about that they've had down.
Mike -- my friend I don't apparently -- drags I have a date that the.
