Fiat currencies around the world are coming under enormous pressure as a result of “printing” money everywhere.
The world is analogous to the story of the little Dutch boy who puts his finger in the dike saving the village from a flood. In the US, the Federal Reserve plays that role, trying to stave off inflation. The analogy is imperfect because the little Dutch boy did not create the problem in the first place.
Unfortunately the analogy fails on another count. The Dutch tale turned out well. The inflation equivalent will not. Pressures are building and the dike is weakening. We are headed for the largest worldwide inflation ever seen. There is nothing the Fed or any other central bank can or will do to prevent the coming flood. They have done all their work in creating this disaster.
The impact will be substantial. According to Sean Corrigan:
… it will not just be the world’s tinpot tyrants and biddable client kings who will pay the price for the Fed’s reprehensible policy of ‘apres moi le deluge’, but it will be the ordinary man and woman who will have occasion to rue a programme so replete with intellectual arrogance, power-worship, and a wilful blindness to its awful, unintended consequences that only a Krugman could approve of it.
An excerpt from a post by Tyler Durden of Zerohedge.com:
Currency debasement on a scale never seen before in modern history continues in the U.S. and other countries. This is leading to a real risk of stagflation and possible even hyperinflation if sane monetary policies are not returned to soon. The fiat currency experiment of the last 40 years (since Nixon came off the Gold Standard in 1971) grows more precarious by the day. Ironically, Alan Greenspan, the central banker most responsible for the cheap money policies and asset bubbles of the last 20 years, has again warned about the euro and dollar being “faulty” fiat currencies. Greenspan again said how gold is the ultimate form of payment and currency (see interview and transcript of interview in News). “What the price of gold is saying is essentially that there are elements within the marketplace which feel very uncomfortable with respect to what’s going on generally,” the former Federal Reserve chairman said. “It’s not an accident that you’re finding that central banks are going in to buy gold.”
