Financial Expert HOPES Inflation Will Only Be As Bad As 1970s

The numbers told the sad story of the Jimmy Carter presidency: interest rates of 21%; inflation at 13.5%, and an unemployment rate of 7%.  And a relatively new economic device called “the misery index” – the combination of the unemployment and inflation rates which Carter had himself used to great effect in his 1976 campaign to win election – was at a shocking 20.5%.

And those who went through those dark and difficult times may soon be looking back to that period as “the good old days.”

Welcome back, Carter.

When Ronald Reagan took office from Jimmy Carter, inflation was at a meteoric 13.3% and the country was in the throes of a fierce recession. There was a real question as to whether workers’ wages would keep up with the costs of living, which made people afraid to either spend or save. And nobody knew how to control inflation – which had risen from 1.4% in 1960 to the aforementioned 13.3% in 1980 – causing a real erosion of confidence in the future. Jimmy Carter answered a reporter’s question as to what he would do about the problem of inflation by answering, “It would be misleading for me to tell any of you that there is a solution to it.”

But Ronald Reagan had a solution.  And by the time he left office, he had solved the problem of creeping inflation increases and had actually reversed the trend: he left behind a healthy inflation rate of 4.1%.

Reagan’s policies set the trajectory for growth that would last for 20 years.

And the only thing that could truly destroy the fruit of Reagan’s policies was the coming of another Jimmy Carter.

Inflation Inevitable, Rogers Says: Could Be “Much Worse” Than the 1970s
Posted Oct 12, 2009

Given the Fed’s extremely easy policies, runaway government spending and shortages of many commodities, inflation pressures are building and destined to get much worse, according to famed investor Jim Rogers of Rogers Holdings.

“The Federal Reserve has laid the groundwork for some serious inflation down the road by printing all this money,” Rogers says. “So have many other central banks.”

Although “the U.S. government lies about inflation” in its official data, inflationary pressures are already evident in nearly everything, excluding energy, Rogers says. Inflation is “going to continue, going to accelerate,” he says. “We’re going to be paying more for just about everything down the road.”

Asked if he foresees a 1970s-style stagflation period ahead, Rogers chuckled and gave an ominous reply: “I hope it’s that good. It might be much, much worse.”

Given that view, Rogers remains very bullish on commodities as we discuss in subsequent clips.

You don’t massively increase the money supply (by running printing presses night and day) without consequences.  But that is exactly what we’ve done.  “The money supply was increased from $600 billion in 2000 to $800 billion in 2007.   This year, it has risen from $800 billion to $1.7 trillion! (Source: Federal Reserve Bank of St. Louis).”  And we aint seen nothin’ yet, as the Fed is planning a 15-fold increase in the monetary base.  Actions have consequences.  And the crazier and more irresponsible the action, the worse and more dramatic the consequences.

The National Inflation Association released a statement back in March following the passage of the massive $3.27 trillion stimulus porker:

“The United States today is in a short-term deflationary phase caused by forced liquidations, de-leveraging, going out of business sales, and other temporary factors.

It is our belief that the monetary policies of the Federal Reserve and United States Treasury will soon put an end to this deflationary phase, and we will see massive inflation in the U.S. that could ultimately lead to Zimbabwe-style Hyperinflation.

The U.S. has lost more than 2.8 million jobs since the passage of the stimulus bill and its promise of “shovel ready projects” that was supposed to prevent unemployment from going over 8%.  It failed to create jobs, but only massively increased our debt.

This country is going to go for a ride, and it won’t be a fun one.

Tags: 13.5%, 1970s, debt, Federal Reserve, inflation, inflation inevitable, interest rates, Jimmy Carter, misery index, spending, stagflation, stimulus, unemployment