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Bloomberg Opinion/Stephen Roach/1-25-2021
“Based on a wildly unpopular forecast that I made in June of a 35% decline in the value of the dollar by the end of 2021, we are only in the third inning of a nine-inning baseball game. If that forecast comes to pass, it will provide an important exclamation point on the first year in office for America’s 46th president, Joe Biden.”
USAGOLD note: With respect to the Bloomberg headline, we would argue that the dollar’s crash is ongoing, though we would not argue too stridently against Roach’s opinion that we may have reached the terminal phase for this leg of the cycle. Please note the chart immediately below. Based on the consumer price index, the dollar has lost 85% of its purchasing power since 1971 when the Nixon administration severed the link between the dollar and gold and launched the fiat money era. Surprisingly, it has lost 52% of its purchasing power since 1990 during a period economists generally describe as disinflationary.
Sources: St. Louis Federal Reserve [FRED], U.S. Bureau of Labor Statistics • • • Click to enlarge.
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