Tom welcomes Michael Pento to the show, following the FOMC meeting on November 10th. Michael shares his views on the Federal Reserve’s decisions and the broader economic landscape. Pento criticizes the Fed’s move to cut rates by 25 basis points and initiate $40 billion in U.S. Treasury purchases, arguing that these actions are unjustified given the current economic conditions, which include record-high asset bubbles and a prolonged miss of the inflation target. He characterizes the Fed’s actions as “monetary malfeasance” and expresses concern about the long-term impacts on the middle class, who have been struggling with affordability issues for years.

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Pento highlights the dangers of the Fed’s interventions, which he believes have exacerbated wealth disparities and created an unsustainable economic environment. He warned that the current economic setup, characterized by excessive debt and asset bubbles, could lead to a catastrophic event rather than a minor economic tremor. Pento also discusses the potential for a liquidity crunch, which could cause a significant market correction, and the possibility of a deflationary event or a credit crisis.

Regarding Bitcoin and other cryptocurrencies, Pento expresses skepticism about their long-term value, viewing them as speculative assets with limited utility. However, he acknowledges that liquidity from the Fed’s actions could support short-term price increases in cryptocurrencies.

Pento also touches on the global trend of central banks accumulating gold reserves, viewing it as a sign of diminishing confidence in the U.S. dollar as the world’s reserve currency. Pento’s inflation-deflation economic cycle model indicates stress in liquidity markets, leading him to reduce his equity exposure. He emphasizes the importance of being cautious and prepared for potential market disruptions, suggesting that investors should consider holding a core position in physical gold and be ready to adjust their portfolios based on economic conditions. He also warns about the risks of a chaotic bond market and the potential for a significant economic event in the near future.

Timestamps:
00:00:00 – Introduction
00:00:15 – FOMC Rate Cut Reactions
00:03:36 – Bonds & Mainstreet Markets
00:07:25 – Stagflation Deflation Dangers
00:09:71 – Global Gold Reserves
00:10:15 – Bond Yields Outlook
00:11:45 – Recession Inevitability
00:13:30 – Liquidity Model Insights
00:16:10 – Eastern Gold Reserves
00:17:17 – Treasury Gold Valuation?
00:18:31 – Miners & Institutional Money
00:20:00 – Pressure & Can-Kicking
00:22:50 – Liquidity Crunch Ramifications
00:24:55 – Silver Price Action & Physical
00:30:50 – Concluding Market Risks

Guest Links:
Website: https://pentoport.com
E-Mail: mailto:mpento@pentoport.com
X: https://x.com/michaelpento

Michael Pento is the President and Founder of Pento Portfolio Strategies with more than 30 years of professional investment experience. He worked on the floor of the NYSE during the mid-90s. Pento served as an economist for both Delta Global and EuroPacific Capital. He was also the portfolio creator and consultant to Delta/Claymore’s commodity portfolios, which were distributed through Claymore/Guggenheim’s sales network.