A Panacea Or A Pandora’s Box – The Inevitability Of Inflation

A Panacea Or A Pandora’s Box – The Inevitability Of Inflation

Share to Linkedin The acclaimed author Ernest Hemingway once stated that "the first panacea for a mismanaged nation is inflation of the currency; the second is war". In the twentieth century, during the eras of Franklin D. Roosevelt and Lyndon B. Johnson, the quandary for fiscal authorities was whether to spend more money on "guns or butter." Both administrations were unique in that they were engaged in historically significant military conflicts, as they embarked on massive social programs such as the New Deal and the Great Society respectively. While the U. S. is currently not as engaged militarily, the Biden era may closely resemble FDR and LBJ as he will likely spend money on gobs of "butter." During these previous periods, the financial economy was sacrificed for the "real economy." With some recent proposals such as Wall Street paying for student loan forgiveness (via a tax on financial trading), we are reminded of the prior FDR and LBJ periods. Though the US dollar did not fare well during those times, it proved to be very good for real assets such as gold in the years that followed as inflation ramped up. Today, whether you look at the price of groceries,