Staring at Stagflation
Stag + Flation + Gold
Time to brush up on what it’s like to live in a stagflationary economy once again. Here are the three most important points:
- STAG – That’s the part that describes the economy as stagnant. It means either slow or no growth, and even economic contraction.
- FLATION – That’s the part that means inflation, that the money is losing value because the central bank is making more of it out of thin air.
- GOLD – That’s not in the word stagflation, but as we experience in the textbook stagflation of the 1970s, gold goes up. Way up.
So what is going on now? Let’s start with STAG. According to a report on CNBC, 59 percent of Americans believe that the U.S. is currently in a recession. They arrive at that conclusion not by looking at the Washington statistics machine, but by looking at conditions in their own lives. Economic growth is hard to spot. Home Depot just warned that consumers are reining in their spending, and the company is seeing wider-than-expected declines in same-store sales.
You might want to factor in rising credit delinquencies, in both credit cards and auto loans. Of course, the high inflation we’ve experienced under Biden makes it harder for people to pay their debt. So much for growth.
Or you might want to consider that the average household has lost about $2,000 in spending power since Biden moved into 1600 Pennsylvania Avenue. And since Harris moved into the Naval Observatory.
How about FLATION? The gyrations in the stock market lately will have thoroughly spooked the Federal Reserve. Have you ever heard the term “regulatory capture”? It means that regulatory agencies end up captured by and doing the bidding of the industries they are supposed to regulate. The pharmaceutical industry is a perfect example of regulatory capture, but so is the Fed. Instead of serving the people, the Fed serves Wall Street and the big banks, bailing them out time after time. This time is no different. The Fed will cut rates on behalf of Wall Street whether their inflation targets have been met or not.
And how does the Fed cut rates? It buys bonds with – here it comes! – made up inflationary money!
James Rickards agrees: “The Fed will be throwing in the towel on inflation in order to calm stock markets. The Fed may end up with the worst of both worlds – continuing inflation and recession known as ‘stagflation.’”
And finally, GOLD. You may remember two years ago when the New York Times admitted that inflation happened “more quickly than economists expected.” Government economists, that is. And Fed economists. For the rest of us, it was clear where Bidenomics would take us.
Markets are pretty good and taking into account new developments before they are widely recognized. Already the gold market sees what is coming. That is why gold has been setting one new high after another this year.
Stagflation is on the horizon. Take steps to prepare for it now. Speak with a Republic Monetary Exchange gold and silver specialist today!