Inflation, loss of confidence, stagflation, the misery index, “malaise” … the 1970s are back. Only this time, with nobody like Ronald Reagan to rescue us.
Many of us would not even permit a rescue today.
The following is by Stephen Barnard, via Robert Arlett :
I am reminded of the period from 1976-1982 when inflation was going from 6% to 14%. My homebuilding business failed, I was unemployed for almost a year, I lost my home, and had to change careers. Interest rates went to 18%, unemployment to almost 11% and, to quote the President at that time, we were in a national ”malaise”. It is hard not to see the parallels today with consumer confidence at its lowest level since 2009, interest rates headed higher, real wages (after inflation) going down, and prices going up, some substantially including cars, houses, rents, travel, etc.
History tells us that weakness invites agression. We saw it in the period preceding WWII where Hitler would create a pretext and take over adjoining countries including Austria, parts of Czechslovakia, and ultimately Poland. The invasion of Poland triggered the start of WWII, with the USA entering that conflict two years later.The fractured and weak responses by an isolationist USA and a Europe weakened by the Depression of the 1930s allowed Hitler’s expansionist dream to become a reality. Again, eerie parallels to Putin’s megalomaniacal dreams of a new “Russian Empire” and the West’s tepid responses.
Leadership matters, and acquiescence to lawlessness as seen in the crime statistics and illegal border crossings have created a sense that our problems are becoming intractable.
In the 1980s the solutions to these problems were not easy. Interest rates were raised, economic activity depressed, military spending was increased, but most importantly strong leadership stood up to the USSR, ultimately ending in the fall of the “evil empire” followed by a period of unprecedented prosperity. It is hard to imagine such a thing happening today.
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