When Trump Turns On “Enemy Within” Fed It May Create 1970s Style Stagflation
April 21, 2017
Is Donald Trump About to Turn on the Enemy Within and Bully Them into Printing Money?
From Mark Obyrne:
David McWilliams has written an interesting article in which he puts forward the case that Trump is likely to turn on the “enemy within,” the Federal Reserve and bully them into “printing money.”
He points out that this was seen in 1971 when Nixon bullied the Fed into printing and debasing the dollar. McWilliams says this would be bad for stocks markets which would fall in value as was seen in the 1970s.
This would be positive for gold as the printing of dollars, rising inflation and stagflation saw gold surge in the 1970s when it rose from $35 per ounce in 1971 to over $850 per ounce in January 1980 (see chart). Along the way there was a significant correction when gold prices fell by nearly 50% – very much akin to gold’s price falls from 2013 to 2015.
McWilliams does not expressly say that it is positive for gold but the 1970s, the historical record and the data shows that the printing of money and currency debasement is positive for gold in the long term.
“What happens if Trump bullies the Fed into accepting his higher growth rates which he achieves by boosting government spending and borrowing billions? Could it happen in the first place?
Yes it could. In the 1970s, Richard Nixon bullied the Fed into printing money so that he could win the 1972 election. It can happen because it has happened. This would mean that all the old rules go out the window. American wages would rise much quicker than they have in the past few decades. The average guy will feel richer and then he will be persuaded to vote for Trump again.