The Federal Reserve raised interest rates last week for the second time in three months. The United States central bank has said that it will pull the trigger on two more rate hikes sometime this year. You can expect the Fed to raise rates multiple times in the coming years for a wide array of reasons.
With that being said, is stagflation – a situation whereby inflation is high, economic growth is tepid and unemployment surges – on the horizon?
This is something that former Texas Republican Congressman and three-time presidential candidate Ron Paul fears.
Alluding to the fact that the institution is “inept” because of its policy of printing money to grow the economy, Dr. Paul cites some negative economic statistics and forecasts a time of climbing inflation. In order to combat the inflation, you’re going to need to hike rates dramatically similar to the early 1980s. This may be great for gold, but it won’t be great for the average household that is already facing immense sums of debt.
Of course, to the economic illiterate, all of this will be blamed on Donald Trump and free market capitalism rather than on the main culprit: the Federal Reserve.
Here is a compelling interview with Dr. Paul and Daniel McAdams talking about the possibility of stagflation:
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