“More specifically, I now hear it commonly said that inflation is the big problem so the Fed needs to tighten to fight inflation, which will make things good again once it gets inflation under control. I believe this is both naïve and inconsistent with how the economic machine works. That’s because that view only focuses on inflation as the problem and it sees Fed tightening as a low-cost action that will make things better when inflation goes away, but it’s not like that. “
USAGOLD note: The unhappy tradeoff is containing inflation with economic weakness. The Fed, says Dalio, will opt instead to “chart a middle course that will take the form of stagflation.” Dalio, we mention for the sake of our new visitors, is a staunch advocate of gold ownership.