You're Feeling the Aftermath of "War Financing"

By Ed D'Agostino | April 5, 2024

Inflation is proving stickier than anyone would have hoped. Lyn Alden, my guest today on Global Macro Update, offers a cogent explanation of why, likening it to the fiscal-driven inflation of the 1940s.

Here’s Lyn:

I started making this comparison in 2020… so before, we saw a lot of this inflation, but we started to see the early signs of fiscal stimulus in response to the pandemic. Basically, if you looked at the numbers of what we were seeing in financial markets, it looked like a war even though it wasn't a war. It was pandemic stimulus and lockdown stimulus, and you had supply chain disruptions and a big increase in money supply. It looked like war financing.

Lyn is the author of Broken Money: Why Our Financial System Is Failing Us and How We Can Make It Better, where they trace the history of money all the way back to seashells. In our interview, we look at how fiscal stimulus continues to affect our economy, along with increasing geopolitical instability and the runaway federal deficit.

Against this backdrop, is it any surprise that gold and bitcoin have both recently reached new all-time highs?

Lyn goes on to discuss bitcoin’s special role in emerging markets, particularly those with authoritarian governments. They say that outside of the top five currencies, local currencies function like arcade tokens—once you leave the arcade, they lose most of their value. Bitcoin and its stablecoin cousins offer people a choice, where they can move money out of highly unstable environments and protect themselves against politically motivated surveillance and the risk of being de-banked. There’s a reason the late Alexei Navalny’s supporters used bitcoin to help fund their efforts.

Lyn also discusses vulnerabilities in our banking system, the problem with India’s central bank digital currency, and how John Mauldin’s Great Reset could play out.

The Great Reset is something we’ll cover more at our 20th Annual Strategic Investment Conference. Lyn is one of many notable speakers on our standout roster this year. Felix Zulauf, Joe Lonsdale, and David Rosenberg will be there, too. I hope you can join us at this virtual event, which kicks off on April 22—learn more by clicking here.

You can watch my interview with Lyn Alden by clicking the image above. A full transcript of our conversation is available here.

Thanks for reading and watching.

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