14-Sep (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan voiced concern that the U.S. economic and political system could be undermined by what he called “crazies.”
“It is the worst economic and political environment that I’ve ever been remotely related to,” Greenspan, 90, told a conference in Washington Tuesday evening sponsored by Stanford University and the University of Chicago.
On the economic front, the U.S. is headed toward stagflation — a combination of weak demand and elevated inflation, according to Greenspan. “Politically, I haven’t a clue how this comes out.”
“We’re not in a stable equilibrium,” he said. “I hope we can all find a way out because this is too great a country to be undermined, by how should I say it, crazies.”
…Greenspan repeated his concern on Tuesday that increased government spending on social security and healthcare are crowding out private investment and leading to slower economic growth. He bemoaned the fact that neither presidential candidate was talking about reining in those expenditures.
“Nobody wants to discuss it” for fear of a political backlash, he said.
PG View: If stagflation is in our future, gold is the ideal hedge. As I pointed out last week, during the last major stagflation event in the 1970s, gold appreciated more than 1,300%.
Please read: Gold as a stagflation hedge, by Michael J. Kosares.
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