To preserve their independence, we must not let our rules load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.” – Thomas Jefferson
The boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation, which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion and thus bring about the crisis. The depression follows in both instances. – Ludwig Von Mises
Amidst the tumultuous ebb and flow of financial markets, gold has once again captured the gaze of investors as geopolitical tensions soar and whispers of inflation become a roar. Recently, the precious metal has graced the $2,656.15 mark per troy ounce, reflecting not merely a commodity’s price action, but the tremors of a deeper unease within the global economic fabric.
In my weekly beacon of Austrian economics insights, I scrutinize these developments from a bastion of free-market principles, wary of the distortions wrought by fiat currencies and central bank machinations. The precarious fiscal stance of the US and broader Western economies has only swelled since my last dispatch. Debt ceilings have become a quaint memory, dwarfed by the huge scale of public borrowing that shadows our future like an impending storm.
In the short term, the specter of conflict between Russia, NATO, and the US has stoked a fevered clamor for the perceived sanctuary of gold. Analysts project a potential climb to $2,800 by the year’s end. This is not driven by mere speculation but is the sober calculus of risk-averse behavior when faced with the bristling uncertainty of warfare and sanctions, where gold has eternally shined as the asset of last resort.
Yet, memories are short-lived in the bustling agora of markets. The past decade’s exorbitant stimulus has been a balm for the moment, but poison for the morrow. Once clamored for its abolishment by voices such as Dr. Ron Paul’s, the Federal Reserve continues to play the conjurer in a spectacle of monetary expansion, which has sapped the dollar and fostered asset bubbles of haunting proportions.
Turning our lens forward, the medium to long-term horizon appears no less fraught. Debt, that ensnaring web spun by spendthrift policies, threatens to suffocate genuine economic activity. Inflation, an insidious tax upon the thrifty, gnaws relentlessly at savings. Interest rates are suppressed to the floor, distorting the delicate balance of savers and borrowers upon which healthy markets hinge.
Suppose courageous steps are not taken to untangle the snare of debt to staunch the bleeding of our currency’s purchasing power. In that case, we will likely witness a most unsettling spectacle: gold ascending as fiat currencies falter, the equity markets pricked by the pin of valuations, and cryptocurrencies vying for the monetary mantle in a referendum against central banking overreach.
Indeed, major financial institutions’ embrace of cryptocurrencies—hailed by some as the bridge to a new system—reflects a nascent rebellion against the fiat regime. Yet untested by the fiery trials of history like gold, such assets watch as the market adjudicates their claim to permanence.
We, free-market sentinels, predict not with the hubris of certainty but with the cautionary tale of cycles past. Speak of rate hikes, and the markets flinch. Whisper inflation and gold glimmers. The patterns are set, even if their amplitude and cadence catch us unawares.
What remains as the bedrock of financial wisdom, untouched by the fleeting currents of the day, is the timeless creed of Austrian economics: that liberty in markets, the sanctity of property, and sound monetary policy are the cornerstones of prosperity. To respect these is to navigate the shoals of short-term upheaval and reach the calmer waters of long-term stability.
As 2024 unwinds its tail of surprises, let us remember the lessons inscribed in the annals of economic thought. Those who hold them close will, I wager, weather the financial storms ahead with a judicious mix of precious metals, an aversion to unserviceable debt, and a watchful eye for the unnatural machinations of central planners.
In closing, consider this not as financial advice but rather as an aid to your contemplation of the market’s stormy seas. The wisdom of Rand, Mises, Hazlitt, and others of their ilk may yet shine as a lighthouse for those navigating these treacherous waters.
*Disclaimer: This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities, or other financial instruments. Seek out the full counsel of qualified financial advisors before making investment decisions.*
Be not deceived – be prepared ~ Silver Savior
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- Note: We are not giving advice; we only give our opinion; we are not financial advisors. This article only represents our thoughts about the economy.