Inflation And Gold In The 1970s Vs. Today’s Situation
The comments below are an edited and abridged synopsis of an article by Anna Sokolidou
History does not repeat itself, they say. However, there are lessons to be learned from the past. The prices of precious metals have fallen since the last Fed’s meeting, and investors are worried that the Fed will hike interest rates in 2023 due to inflationary pressures. Sokolidou explains how inflation can get out of control by comparing the current situation to America’s Great Inflation of the 1970s.
In conclusion Sokolidou writes, “The world changes fast. The very same situation might not completely repeat itself. However, we can clearly see the parallels between the 1970s and today. Inflation is rising fast, whereas the unemployment rate is still quite high. It seems to be the Fed’s priority to stimulate the labor markets, whereas inflation is seen as transitory. There are fears the overall price level will get totally out of control. There was cost-push inflation just like there is today. At the same time, there was a crisis of public confidence, which may also happen nowadays. That is why the gold prices soared back then, and they might rise substantially in the near future.”