By Alasdair Macleod – Re-Blogged From GoldMoney
There are growing expectations that the current cycle of rising interest rates will result in a deflationary recession. While a credit crisis is increasingly likely to evolve in the coming months, it is a highly inflationary situation. A combination of higher interest rates and catastrophic falls in the purchasing power of fiat currencies will continue to plague welfare-driven states in the wake of a credit crunch. The standard post-crisis solution of monetary and fiscal reflation will not be available. This article examines the ultimate consequences of the West’s abandonment of sound money, free markets and wealth creation in favour of increasing state intervention and wealth destruction.