The prospect of a Biden presidency is bringing some pessimism regarding the U.S. Dollar. The investment website, Motley Fool, is suggesting that investments in gold and related stocks could be a wise move during the Biden administration. The article recommends Kirkland Lake Gold as being an excellent stock option. Kirkland is one of the premier gold mining companies with locations in Canada and Australia. Why would an investment website suggest to invest in gold due to Biden winning the presidency? The answer is quite simple. The article pointed to the potential of Biden having a “dovish” monetary policy. As president being more inclined to implement rounds of stimulus spending. Often, stimulus spending is funded by printing more money. Actively debasing the U.S. Dollar, making alternatives such as gold and silver look more attractive.
President Trump was hardly a bastion of fiscal responsibility. It is difficult to recall a president gracing the Oval office over the past three decades that has been. While Biden is centrist at heart, he will succumb to the partisan pressures of the Democratic party. Biden would then implement wide-reaching initiatives that will amount to nothing more than unchecked profligacy. The mounting despondency from the financial sector poses some valuable insights. Nothing in this world is “free” costs dispersed amongst the tax-payers. The prima facie assumption of government services being “free” is false. Even if there is not a direct tax funding a program, that does not mean that the citizens are not indirectly taxed. The government chooses to pay for safety-net programs by printing money. Inflation only serves to diminish the purchasing power of the Dollar. The average-Joe voter then has to contend with higher nominal prices.
We should all hope that the doom and gloom plaguing the current economic landscape is hyperbole. Unfortunately, fiscal conservatism is no longer a focal point of conservativism. Never mind liberals or centrists. Economic policies never operate in isolation. There is always a cascading array of various consequences resulting from a single action. Increased spending tends to lead to inflation. Inflation has an innumerous number of repercussions through the economy. If John Locke was correct about the neutral nature of the quantity of money, investors would be more optimistic regarding the Dollar. Generous benefits programs may sound great on paper. However, what will the long-term consequences entail?