As the Fed prints more money, the chances of high inflation state are increasing, which is an alarming situation for the US economy. Goldman Sachs warns that the US dollar is losing the status of reserve currency all over the world.
Fed Money Printing
Goldman Sachs analysts believe that investors are very disappointed by surplus money printing on the part of Fed, and rising gold price is the proof that they are finding safe-haven assets. Goldman strategists said:
“Gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows.”
The long-term effects of money printing are very dangerous and threatening for the dollar as the world’s reserve currency. Analysts at Goldman Sachs said:
“The resulting expanded balance sheets and vast money creation spurs debasement fears” and this situation creates “a greater likelihood that at some time in the future, after economic activity has normalized, there will be incentives for central banks and governments to allow inflation to drift higher to reduce the accumulated debt burden.”
Peter Schiff Reaction
Peter Schiff has also reacted by saying,” The entire house of cards that defines the U.S. economy rests on the foundation of the dollar’s reserve currency status. Lose that and the economy topples.”
In order to hedge their investment and in an attempt to prevent inflation, investors have turned to gold and other safe-haven assets including Bitcoin. In recent days, gold has outperformed all traditional assets in the bull run. Similarly, Bitcoin has also reached its highest position since the start of the year.
Galaxy Digital CEO Michael Novogratz said that retail investors who were attracted to tech stocks are now returned to Bitcoin and gold again due to the latest price jumps. Novogratz said:
“A lot of that retail interest shifted to the story stocks, to the tech stocks, because they were just more fun … Yesterday you saw a lot of money shift back over to gold and bitcoin.”