Economic Outlook: Economic Summits and Our Era of Monetary Inflation

No matter how many economic summits world leaders held, their policy prescriptions failed to slow monetary inflation.

| September/October 1978

As you probably know, another Economic Summit Meeting was held in Germany in mid-July and—as usual—Little Jimmy Carter and all the other world "leaders" who attended declared the gathering a great success. And all the newspapers and television journalists who covered the confab then ran stories telling us that the Summit was, indeed, a Great Success.

As this column reported following the London Economic Summit back in May 1977, however, the real story of the meeting was the fact that it was held at all.

Back in the "Good Ol' Days" before the printing press money boys gained control of most of the world's governments, you know, there simply wasn't any need for such grandstand plays to reassure the planet's peons that "someone's doing something" about the earth's (politically created) economic ills. It was 31 1/2 years between the major economic conference held in Bretton Woods, New Hampshire in July of 1944 and the one held in France November 15 and 16, 1975. But in just the following two and a half years, the world has witnessed three more Economic Summits (one in Puerto Rico in June of 1976, a second in London in May of 1977, and—now—a third in Germany in July of 1978). More are on the way.

And, as this column asked after the London gathering, "Why is it that the more frequently our 'leaders' get together to 'solve' our economic problems, the faster the world's economy and economic outlook goes to hell in a hand basket? And just how long will it be until those same 'leaders' declare monthly—or weekly—Economic Summits?"

Era of Monetary Inflation

The stock market goes up one week and down the next and the bulls seem to stay bullish and the bears bearish. And all the time—over the long haul—as the traders and the buyers and the sellers count their short-term paper profits and losses, the real value of the stock market (thanks to the erosion of inflation) continues to go down. The value of the Dow Jones Industrial Average Index —when computed in constant 1967 dollars—is now bouncing around down in the 500-550 region, not up in the 850-900 area as currently (late July 1978) reported (in inflated dollars).

Which, of course, is why the smart money for years has been going into real wealth—gold, silver, land, homes, liquor, works of art, diamonds, crude oil, tools, long-term-storage food, etc.—that its owners can touch and feel and which tends to increase in value as paper dollars and other paper promises (bonds, stocks, pension funds, social security, etc.) continue to erode away.

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