So if Volker's Hammer brought inflation and gold prices down to earth in '81, what will do it now? With the debt crisis making increases in interest rates implausible, what will bring gold back down now?
From 1977-1980, gold price increased 5x due to high inflation, a loss of faith in the credibility of elected US government leaders, Russian invasion of a foreign nation, and Iranian instability…but I digress.
Ultimately, raising interest rates rapidly reestablished faith in USD stability (albeit with tremendous pain to farmers and real estate markets) and gold slowly unwound over the next few years.
What will save us now?
USD and Gold Without Volker's Hammer?
byu/Mysterious-Entry-357 ininvesting
Posted by Mysterious-Entry-357
3 Comments
>With the debt crisis making increases in interest rates implausible
This is not the Fed’s fault or problem. At the end of the day, they will absolutely crank up rates to stop inflation if needed
But inflation isn’t high enough to deal with it at the expense of jobs right now. Honestly, considering how bad the dollar is getting crushed internationally, it’s a miracle inflation is this low and we should cherish it for what little time it lasts
Not happening with the current administration.
The answer is in your question; history doesn’t repeat but often rhymes. To get out out of this situation, there will have to be a measure as wild as the dropping of gold standard. A year ago, I laughed at the conspiracy theory of “digital dollar”, I don’t laugh at it as much anymore.
Bottom line is the same. A lot of pain and hurt, again, to the bottom 90%.