The Fed is in a very difficult position as it tries to balance the benefits of cutting interest rates with maintaining the value of money.

Right now, there is a great deal of uncertainty throughout the economy, along with a deterioration in sentiment.

Combine that with political pressures and the realities of our upcoming debt service payments, and you have this value of money conflict.

So changes in the monetary policy — especially if the cut is too aggressive — could lead to a period of great concern.

My advice: Watch the yield curve. If you see long rates rising alongside downward movement in the dollar and rises in gold, you’ll know there’s a movement out of bonds. Because the value of money matters a lot.

From: Ray Dalio