After the Brexit referendum, Alan Greenspan, former Federal Reserve Chairman, says this is the worst period since being in public service. He says that a “terrible mistake” has been made by holding a referendum, which has led to a “terrible outcome in all respects.” He believes that Northern Ireland and Scotland will probably head in the same direction and seek independence from the European Union.
As for the financial troubles, he warns that a debt crisis will be inevitable and blames leaders for failing to “restrain entitlement spending.” He goes on to say that he “would not be surprised to see the next unexpected move to be on the inflation side.” Hyperinflation, Greenspan says, is coming and we will not know about it until it happens. “If you look at human history,” he says, “there are times where we thought that there was no inflation and everything was going fine… The oil prices have had a terrific impact on global inflation and would not be surprised to see the next unexpected move to be on the inflation side. You don’t have it until it happens."
Greenspan’s simple solution to economic struggles: return to the gold standard. He notes that the economy performed successfully under the gold standard, even before the Federal Reserve was created.
“Now if we went back on the gold standard and we adhered to the actual structure of the gold standard as it exists let’s say, prior to 1913, we’d be fine. Remember that the period 1870 to 1913 was one of the most aggressive periods economically that we’ve had in the United States, and that was a golden period of the gold standard.”
One positive note that he added about Brexit: “Luckily, the UK was not part of the monetary union or else it would have been game over.”
Do you agree with Greenspan? Could a gold standard really work?
Full Alan Greenspan interview below:
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