RE:Just came across from Kitco siteJames Rickards agrees... ***
Dear Reader,
For months, all we’ve heard about is how the Fed’s going to raise rates, the Fed’s going to raise rates. Whatever the particular timing is, that’s all that’s anyone’s thinking about. Then they’re saying, when the Fed raises rates, will they tighten more, or will they tighten twice? Will they tighten three times? That’s been the discussion.
Here’s a prediction for you. Before the end of 2016, the Fed is going to ease. Now, they may or may not tighten first. They may tighten and then ease, but we’re looking into the teeth of a recession. The U.S. economy is heading for a recession. The world is heading for a recession.
The Fed is tightening into weakness. They should’ve raised rates back in 2011/12. If they had done that, they could ease today. Two wrongs don’t make a right. The fact that they failed to raise rates five years ago doesn’t mean that they should raise rates today, but they’re going to do it anyway.
The problem is they’ll be tightening right into a recession. That will make things worse. When it gets bad enough, they’re going to have to reverse course and ease. I would look for Fed easing in one of five forms…
It could be QE4, currency wars, what’s called “helicopter money,” negative interest rates or forward guidance (forward guidance is basically a kind of verbal promise not to raise rates for a long period of time).
We’ll report on which and the implications 2016 unfolds. My prediction is that with or without more tightening, the Fed will ease before the end of 2016.
Regards,
Jim Rickards
for The Daily Reckoning