Crazy Days for Money
The comments below are an edited and abridged synopsis of an article by Alasdair Macleod
This article explains why growth in GDP represents growth in the quantity of money and is not representative of activity in the underlying economy. The authorities’ monetary response to the current economic situation is misguided, based on a misunderstanding of what GDP represents.
The common belief in the fund management community that rising interest rates are bad for gold exposes a lack of understanding about the consequences of monetary inflation on relative time preferences. Rising interest rates will be with us shortly, and they will burst the bond bubble with negative consequences for all financial assets and the currencies that have inflated them.
In short, we are sitting on a monetary powder keg, the danger of which is barely understood by policy makers and which could explode at any time.
Up for discussion: Introduction; fiat interest rate rises will be unstoppable; metallic money is universal; fiat money is destroyed by its creator; pursuing policy errors to destruction; cryptocurrency rivalry; why gold is not reflecting hyperinflation of the dollar; silver turns the screw on the paper system; and summary/conclusion.
“The only protection is to hoard physical sound money, vaulted outside the banking system. Price is immaterial. Those who have no physical gold or silver are unlikely to have the opportunity to correct their error.”