Description: Political cartoon by Etta Hulme. This cartoon appeared in the Fort Worth Star-Telegram. This cartoon depicts Jimmy Carter in colonial attire, riding a horse as a bell ringer. He is coming into an old town shouting and warning, “Inflation is coming! Inflation is coming!” There are three individuals wearing barrels instead of clothing and the man is pointing to the right and says, “It went that way!”
If the Federal Reserve does not sufficiently reduce its balance sheet by taking money out of the system, then higher interest rates will actually increase inflation as it increases the cost of doing business.
Only reducing the Fed’s balance sheet, or some kind of credit tightening, will reduce inflation. The Fed will prevent a “recession” before midterm election results. We will experience true tightening of monetary policy in Q1 of 2023
The period of the 1970’s is known as the period of the Great Inflation. Inflation reached unprecedented levels. It is similar to our current environment.
All of the problems that we today in the monetary system are a direct result of the decision made in 1971 to abandon a fixed link back to gold. Gold provided discipline in government spending. The government could not spend more than their gold reserves. Since we left the gold standard, it has been a perpetual stimulus. Which as a result has devalued the dollar.
We were creating more money than we have in gold reserves.
By removing the link between the US dollar and Gold, president Nixon created a system where all currencies were backed by nothing, this is what is known as a FIAT currency. A currency backed by nothing, and only government promises.
Every paper currency measures itself against the dollar.
During moments of Global Insecurity the dollar gets stronger because its is known as the world’s reserve currency.
Description Political cartoon by Etta Hulme. This cartoon appeared in the Fort Worth Star-Telegram. The image is divided into two scenes. On the first scene there is Uncle Sam cheking hands with a worker holding a beam. The worker is labeled “Steel industry”. The beam is labeled “Contract settlement”. On the second scene, the worker has turned around to leave and has just hit Uncle Sam on the head with the beam. The swing movement of the beam is labeled “8% price increase”.
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