Market Turmoil as Fed Shifts from 2% Inflation Target – Larry McDonald

Financial markets are on the brink of a major shift as investors flock to hard assets, according to Larry McDonald, Founder of The Bear Traps Report. With the national debt soaring to nearly $35 trillion, McDonald warns that the only way out of this debt crisis is through inflation or default.

In an interview with Michelle Makori of Kitco News, McDonald emphasized the need for the Federal Reserve to raise its inflation target in order to monetize the debt. However, he also cautioned that raising interest rates could trigger a financial crisis worse than the one seen in 2008.

McDonald predicts that the Fed will have to adjust its inflation target to avoid a banking collapse and recession. He suggests that the central bank will need to work with other central bankers to pitch this idea at the Jackson Hole Economic Policy Symposium.

As capital flows out of financial assets and into hard assets, McDonald sees a commodity bull market on the horizon. He believes that gold could reach $3,000-$3,500 an ounce in the next 12-18 months, but he is even more bullish on another precious metal, which he believes is undervalued compared to gold.

Overall, McDonald’s outlook is for a dramatic re-pricing of all asset classes as investors seek refuge in hard assets amidst a world of persistent inflation. Watch the video above for more insights on McDonald’s top commodity plays and price targets for silver, platinum, oil, and natural gas.