The Fed, Debt Crisis, and the Gold Standard
Last week Peter appeared on Kitco News to chat with Michelle Makori about the Fed, the debt crisis, and the future of the country. Peter issues predictions about de-dollarization and an eventual return to the gold standard.
Job Statistics and Productive Jobs
In the context of a recent large downward revision to job statistics, Peter explains why all jobs aren’t created equal to begin with. He highlights that the largest segment of jobs being created are government jobs, which are non-productive and tend to make productive people less productive. This ultimately leads to larger deficits and inflation, as the Fed prints money to support these jobs.
Insight: The focus on job creation should be on productive jobs that contribute to the economy’s growth and efficiency.
Fed’s Reliance on Questionable Data
Makori humorously points out the irony in trusting the government to report on inflation and economic data, likening it to asking the mafia for crime statistics. This sheds light on the questionable foundation on which the Fed makes its policy decisions.
Insight: The validity of the data the Fed relies on to make crucial monetary policy decisions should be questioned, considering potential biases and inaccuracies.
Gold as Indicator of Loose Monetary Policy
Peter emphasizes that the current Fed’s monetary policy is too loose, as evidenced by the record-high price of gold. He challenges the notion that the policy is tight, pointing out that gold serves as a key indicator of the effectiveness of monetary policy.
Insight: Gold prices can serve as a reliable indicator of the appropriateness of current monetary policy measures.
Debt Accumulation and Unsustainable Trends
Politicians continue to accumulate debt at alarming rates, leading to significant financial burdens and interest payments. While Congress may delay the consequences by kicking the can down the road, the long-term impact of increasing debt levels is unsustainable.
Insight: The reliance on debt to finance government operations is indicative of deeper structural issues that must be addressed to ensure long-term economic stability.
The Future of Currency and the Role of Gold
Peter discusses the inevitability of de-dollarization and highlights gold as the ultimate solution. He suggests that gold, historically recognized as the best form of money, will reclaim its status and potentially lead to a return to the gold standard.
Insight: The transition back to a gold standard represents a potential shift towards a more stable and reliable monetary system.
In conclusion, the conversation with Peter sheds light on the challenges posed by current economic trends, the implications of government policies, and the potential role of gold in shaping the future of currency.
