Shaking our faith in money

Addictive though the hacking inquiry is, the average Brit is probably more worried about the slow decimation of his spending power at a time when salaries are flat. Against this backdrop, the price of gold today has broken $1,600 an ounce.  With inflation and the Fed’s printing presses whirring, faith in paper money is taking a knock – and this is reflected in the price of gold.  Fears of a debt crisis in Europe add to it too, with a disaster scenario all too easy to imagine. Over the last decade, the West blew a bubble fuelled by low interest rates and debt-financed consumption. The bubble burst. Solution: even lower interest rates, and even more debt-financed consumption – but this time, with added inflation. If there is a crash again, and interest rates are already at rock bottom, governments’ only tool will be the printing press.

Today’s Wall St Journal Europe has an interview