How the long debt cycle might end

Financial Times/Martin Wolf/5-15-2019

“Start then with inflationary fire. Much of what is going on right now recalls the early 1970s: an amoral US president (then Richard Nixon) determined to achieve re-election, pressured the Federal Reserve chairman (then Arthur Burns) to deliver an economic boom. He also launched a trade war, via devaluation and protection. A decade of global disorder ensued. This sounds rather familiar, does it not? In the late 1960s, few expected the inflation of the 1970s.”

USAGOLD note:  True, “in the late 1960s, few expected the inflation of the 1970s.”  But the few who did profited enormously by purchasing gold at $35 per ounce just before the United States devalued the dollar and holding it through the following highly inflationary decade. It rose nearly 25 times.  What the current president is attempting to do today de facto is what Nixon had the luxury of doing de jure by simply raising the official dollar price of gold.  The current president given his proclivity for easy money must envy the way it was in 1971.  That aside, the subheadline to this article is the one that caught by attention: Some fear the fire of inflation; others the ice of deflation.  Either way, as we have said many times here, gold historically has been an effective hedge against either – fire or ice.

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