Why Is Silver Outperforming Gold?

4. Inflation & Deflation: The massive amounts of debt that governments have accumulated will come into focus once the pandemic crisis mode passes. Remember governments have limited choices on how to deal with massive debt problems. Two of the main ways are: 1.) inflate their way out (it is no wonder central banks are all vowing for higher inflation), with the assistance of financial repression measures, such as forced low-interest rates, or 2.) governments can shift to austerity type policies. These austerity policies often include higher taxes and cuts to government services. And remember that governments that implement drastic austerity type policies are usually booted out of office in short order. One last option that some governments have resorted to is creative destruction through, depression, deflation, and default. However, this last option is not a viable option for many advanced economies.

And governments are not done adding to their debt levels yet, the US for example, recently passed another US $1.9 trillion fiscal packages and has turned its attention to US$3 trillion more in an infrastructure spending package!

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