As Dr. Scott Gottlieb, the former head of the Food and Drug Administration recently stated, the best that we can hope for now in the West is that we slow down the rate that the virus is spreading, prolonging the lifespan of the virus, but enabling our healthcare systems to handle the monumental workload that is about to come their way, saving countless lives in the process.
Unfortunately, this is going to come at a cost, businesses around the world are already feeling the pinch through a greatly reduced supply chain, via the impact that the coronavirus has had on the Chinese manufacturing sector, however, the real pain is yet to be felt.
Next comes the quarantines, closures and most importantly, self-isolation phase, the latter of which has the potential to bankrupt many small to medium size businesses who won’t be able to weather the storm, due to a greatly reduced cash flow.
Large business, particularly the ones that Western governments deem to be “too big to fail” will be bailed out in the coming months, if need be.
The precedent for this unfolding was already been set by the 2008 crisis and you can expect that the Federal Reserve and other Central Bankers around the world will rev up the imaginary printing presses, printing that sweet, sweet digital fiat currency in illusionary bucket loads.
Never before has it been easier to enact quantitative easing, than in the present day, than any other time in history. Everything is digital, including the vast, vast majority of our fiat money supply.
Add a 0 here, add a zero there, poof, more money.
Issue some more made up out of thin air Treasury Notes, problem solved… Well, at least in the short term.
Already, we can see this unfolding in front of our very eyes.
In what can only be described as a dramatic attempt of “shock and awe”, the Federal Reserve has gone “full force”, pumping an extraordinary $1.5 trillion of “Not QE” into the system.
(Chart source, Zero Hedge)This is being done in response to a complete and utter meltdown in the global markets, as the coronavirus continues to spread seemingly unchecked throughout the West, with containment, as previously mentioned, well past the point of no return.
What is even more shocking, is the fact that this comes on the heels of the Federal Reserves pumping hundreds of billions of dollars into the overnight repo markets, already this week!
(Chart Source, Federal Reserve)The last update that the Federal Reserve balance sheet received was on March 4th, therefore, the already rapidly rising Fed balance sheet, is soon to receive another drastic spike higher in the coming days with this latest injection into the markets.
Clearly, this is “Not QE”, not anymore.
Additionally, not to be outdone, other governments around the World are stepping up to the plate, taking action and putting into place their own forms of quantitative easing, hoping to combat the economic fallout that is soon to occur due to the coronavirus.
A quick search on google turns up countless stories, highlighting how much fiat money is soon to be artificially injected into the system.
(Chart source, goldprice.org)This is happening as people scramble for liquidity, however, just as was seen when the dust settled after the 2008 crisis, precious metals are destined to move higher as the weak hands are flushed out and the smart money solidifies their positions into safe haven assets, pushing bullion prices higher as they account for the historic amount of QE that is soon to be injected into the system.
This storm is sadly far from over, however, this does not mean that you will not weather it, on the contrary, the vast majority of us are going to be perfectly fine, however, cooler heads will prevail above all others.
Be smart, get prepared, mind your personal health, and as always, keep stacking.