From Inflation to War Drums: A Template of Debt Madness

By Matthew Piepenburg

Partner

September 24, 2024

VON GREYERZ Partner, Matthew Piepenburg, joins Dunagun Kaiser of Liberty & Finance in another refreshingly candid discussion of deteriorating financial, social and geopolitical conditions in the U.S. and abroad.

Piepenburg places the Fed’s recent and much-anticipated rate cut into sober perspective. Powell has effectively admitted defeat in the Fed’s alleged “war on inflation,” cutting rates well before hitting the Fed’s 2% CPI target for the simple reason that not even Uncle Sam can afford “higher-for-longer.” Piepenburg discusses a trapped central bank, explaining how whichever direction the Fed goes—higher rates or lower rates—the now obvious endgame is inflation and currency debasement. This hard reality makes precious metals an undeniably sober asset in a world drunk with now open and obvious debt addiction.

Piepenburg reminds us that interim recessionary forces or even a potential market mean-reversion could be temporarily dis-inflationary, but in the end, all broke regimes will have no choice but to further debase their currencies to monetize otherwise unsustainable debt/bond payments. This a template as old as history itself.

An equally classic template for broken nations is to take their countries to war as a politically distractive means to garner support for inflationary pains blamed on a foreign “bad guy” rather than true, internal monetary incompetence. Toward this end, the evidence of mounting military brinksmanship concerns us all, and Piepenburg endeavours to put such madness (evil) into context.