It will turn out to be largely impossible to normalize interest rates without collapsing the economy

TheMarketNZZ/MarkDittli interview of Edward Chancellor/7-21-2022

photograph of $100 bills and an hour glass

“The system is very fragile. If my underlying thesis is correct, that the world can’t really cope with higher interest rates without falling to pieces, then central banks will have an extraordinarily tough time ahead of them. Many observers draw parallels to the 1970s today, but I would say things are even more challenging than back then: Compared to the seventies, we have much lower interest rates, much higher debt and much more inflated asset valuations today.”

USAGOLD note: Chancellor envisions a cure every bit as damaging as the disease, and acknowledges as much in this interview. In the interim, though, he foresees a ‘stop and go’ inflation much like the 1970s only worse – a period when the Fed occasionally slams on the brakes only to suddenly accelerate again. As of this past Wednesday, the Fed hinted at more of a tapping than slamming – a different matter altogether, and the markets, including gold, reacted accordingly. “Time is money,” he says. “And if you don’t place a proper price on time, then the world will turn upside down.” Chancellor is the author of a much-discussed new book, The Price of Time: The Real Story of Interest.

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