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Inflation fear and their consequences

These are the excerpts from the Steve Saville's editorial from Gold Eagle titled "The End Game".

"As we've said many times in the past, keeping the inflation going is not the real challenge for the Fed; rather, the real challenge for the Fed is to keep inflation EXPECTATIONS in check. In our opinion, the next time inflation expectations spiral out of control will be the last time because doing what Paul Volcker did at the end of the 1970s (pushing interest rates to astronomical heights) is no longer a viable policy option. This is why the Fed's biggest fear is an uncontrolled rise in inflation expectations."

"It is such a basic economic truth that someone with the ability to increase the supply of some 'thing' by an unlimited amount also has the ability to push the price of the thing down by as much as they desire. This is true regardless of whether the thing in question is a dollar or an apple or communications bandwidth. Central banks have the ability to create currency in unlimited amounts so they have the power to reduce the purchasing power of currency under any and all circumstances should they choose to do so."

"The point is, the Fed does have the power to keep the inflation going and the fact that debt levels have become so high means it has no alternative other than to keep the inflation going. Our view, therefore, is that the inflation will continue until the dollar and all other fiat currencies become so devalued and discredited that they cease to function as mediums of exchange, or, at least, until inflation fears become great enough that the current monetary system is abandoned in favour of something else."

"As we've said many times in the past, keeping the inflation going is not the real challenge for the Fed; rather, the real challenge for the Fed is to keep inflation EXPECTATIONS in check. In our opinion, the next time inflation expectations spiral out of control will be the last time because doing what Paul Volcker did at the end of the 1970s (pushing interest rates to astronomical heights) is no longer a viable policy option. This is why the Fed's biggest fear is an uncontrolled rise in inflation expectations."


:) Falkor

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