Daniel Lacalle’s diagnosis of the global economy and the method of inflation hedging-

-Daniel Lacalle’s diagnosis of the global economy and the method of inflation hedging-

May 19, 2024 (Reuters) – “Daniel Lacalle Fernández,” a Spanish economist and professor, has been posting a lot these days discussing the following key points about the global economy.

“Inflation Is A Policy. Gold Does Not Reflect Monetary Destruction, Yet”

In other words, “inflation is a policy. Gold is not yet reflecting the destruction of money,” which means that due to inflation, the price of gold is still likely to rise.

And now he’s talking about an increase in the U.S. money supply.

In other words, he affirms that “the money supply is increasing again, and persistent inflation is not surprising.” He also argues that inflation occurs when the money supply increases significantly than the private sector’s demand (the money supply again, and persistent inflation is not a service. When the amount of current inflation is significantly above private sector demand).

In other words, the current increase in the US money supply is increasing due to factors outside private demand rather than private demand.

In other words, ahead of the US presidential election, the money supply is increasing through political situations, as he claims.

The estimated “unsupported Social Security and Medicare debt is $175.3 trillion,” according to a February 2024 U.S. government financial report, which is 6.4 times the U.S. GDP, says math is problematic if you think you will finance these resources with taxes “for the rich.” (The established unfunded “Social Security and Medicare liability is $175.3 billion” (Finance 2024). Yes, that is 6.4 times the GDP of the United States. If you think that will be enhanced with taxes “for the rich,” you have a problem with mathematics).

In other words, it is emphasized that the government is solving the problem with debt such as issuing government bonds, although the lack of “financial resources for unsolicited social security and Medicare debt” should be raised through taxes.

In short, it means that the tax reduction of the rich only increases the national debt.

So Daniel Lacalle said on May 17, 2024, the U.S. dollar’s monetary value has fallen due to the government’s astronomical government bond issuance, and according to Bloomberg, gold has risen 89 percent in the past five years, and the S&P 500 has risen 85 percent, but the U.S. aggregate bond index is a disappointing 0.7 percent (Gold has been 89 percent in the past five years, completed to 85 percent in the S&P 500 and a dispensing 0.7 percent in the U.S. aggregate bond index (as of May 17, 2024, According to Bloomberg).

In the end, Daniel Lacalle’s claim is leading to a surge in global raw materials.

As of May 20, 2024, metals such as gold, silver, and copper are soaring daily, and grain prices such as wheat, soybeans, and corn are also soaring.

And Daniel Lacalle concludes that having cash now is risky, accumulating government bonds is reckless, and denying gold is denying the reality of money (Staying in cash is dangerous; but rejecting gold is denying the reality of money).