Reply #2: high interest rates combined with high inflation

[Warpy]

is what flattened so many of us starting in late 1978. There was no commensurate rise in wages, and wages still lag far behind wages in the early 1970s in terms of purchasing power.

During periods of high inflation, savings represent a net loss in purchasing power. During periods of high interest rates, investing in industrial stocks represent a hope for the future, not earnings power in the present, and can also represent a net loss in purchasing power.

Gold has been the one sure hedge against inflation in the past, simply because its value in purchasing power follows both inflation and deflation. The problem is finding a buyer when you need groceries.

This go-round with economic disaster will be unlike that in the late 1970s as we have been hemorrhaging jobs for over 3 years, and this trend is likely to increase, rather than decrease. Eventually we'll reach a tipping point in terms of strangling the consumer economy, and it remains to be seen whether we'll have a deep recession or go all the way to depression, dragging the rest of the world along with us.

The present administration, of course, is clueless.

We're all about to experience that Chinese curse as our times become all too interesting.