The age of credibility for central banks is over

Bloomberg/John Authers/6-22-2022

“In place of gold, currency’s anchor is the trust in the central banks that issue them. Now credibility appears to be at an end. With central banks desperately ripping up their playbooks to try to rein in inflation that’s veered far beyond target, they’re admitting they’ve been wrong, and giving up on trying to steer the markets on their plans for the future. That’s alarming, because the precedent of the 1970s is not encouraging.”

graphic image of a book and reading glasses A Good Weekend ReadUSAGOLD note: Articles, like fiat currencies, come and go. Once in a while though one sticks like a gold coin in the palm of the hand. Authers sees the recent central banks’ inflation blunder as more than just a gaffe. He says they “have destroyed the trust that’s anchored the global financial system since the end of the gold standard.” So then……… Where do we go from here? If gold hedges anything, it is the shortcomings of central banks. Thus, if we now find ourselves in the beginning stages of the big one – the end of what Authers calls The Age of Credibility – gold could become a prime candidate to fill the yawning credibility gap opened by the central banks. “The word of Powell or Lagarde,” he concludes, “is no longer as good as Volcker’s, and it’s certainly not as good as gold.”

 

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