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Showing posts from December, 2012

All About Inflation

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My daughter asked me recently why Governments can't just print more money to escape a recession. It's an astute question, because of course they do but call it 'quantitative easing' which brings the risk of inflation with it like a plague-infected flea on the back of a rat.

If you ask anyone in the street and many politicians, it's quite likely that they won't recall how we arrived at the mess we are now in, in the first place and it's all to do with Gold.

Until 1971, the quantity of dollars the US Government placed into circulation was linked to the amount of Gold held in the treasury at Fort Knox; remember James Bond and Mr Goldfinger? Most western governments worked the same way and this was called the 'Bretton Woods' standard and quite simply prevented governments, like our own, from printing currency when they wanted to.

However, in the irresistible race to make government larger, raise money for huge projects and to employ millions of hithert…