by Gary Alexander

April 13, 2021

“Money is more than an artifact: It is an idea, a central feature of civilization, the health of which depends, in a liberal society, on the predictability of its value, its stability, not only today but in the distant future. Money is, as Keynes said, a link between the past, present and future, in order that long-term commitments and contracts can be made and kept at interest rates that express the real scarcity of capital, the urgency of time, with as little chance of forecasting error as humanly possible.”

– Robert A. Mundell, “The Debt Crisis: Causes and Solutions,” Wall Street Journal, January 31, 1983

Last Sunday, April 4, we lost a great champion of economic sanity, Robert A. Mundell, the 1999 Nobel Prize winner in economics, the inventor of the Euro currency and, most importantly, a long-time champion of honest money. He died on the cusp of the passage of the second $2-trillion package of fiat money programs in three months under the Biden administration. He has clearly gone to a better place.

Nobel Prize Photo

Mundell was Canadian. He grew up close to my home turf in Seattle, first matriculating at the University of Washington before moving on to MIT and the London School of Economics. He lived through the great “stagflation” of the 1970s which drove many of us into the arms of gold 50 years ago, when Nixon closed the “gold window” on August 15, 1971, and then 40 years ago when the Prime Rate hit 21%, 10-year notes reached 15.84% and the 30-year fixed rate hit a high of 18.63% in 1981. Those were the fruits of going off the gold standard and setting the dollar afloat, only to capsize in a value-relativistic world.

Those lessons now apparently must be learned all over again by a generation which never felt the pain of the 1970s. A new mystical theology called Modern Monetary Theory (MMT) promises a free lunch of prosperity for all by printing unlimited funds for all with no significant “morning after,” either through inflation or debt hangover. We are now in that magic period between the dream state and waking up.

Writing 40 years ago in The Wall Street Journal (September 30, 1981), Mundell spoke of the after-effects:

“Since the breakdown of the U.S. gold standard, the U.S. monetary system has produced more dollars than in the entire previous history of Republic. The prices of gold, oil, silver and other commodities have risen more than tenfold and, barring a drastic change in the monetary system, prospects are for more of the same in the future. Never before in U.S. history has the Treasury had to pay 15% for 30-year bonds.”

Enjoy Economic Nirvana While It Lasts, Before Inflation Returns

But the dollar is currently strong, you say? Compared to what, and when?  From March 15, 2020 to year end, the U.S. Dollar Index was down over 12%. It rose in the first quarter of 2021, but the Dollar Index is down 1.2% so far in April after the Fed reiterated that it won’t raise rates despite forecasts that the U.S. economy will likely recover faster than its peers. Longer term, the dollar is down 99% to gold since the Federal Reserve was created in 1913, and the dollar is down 98% to gold since it was set afloat in 1971.

FRED Graph

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The paper money universe is often a “race to the bottom” to see which currency can lose value to its rivals to gain a trading edge. For instance, the dollar has been up and down vs. the euro and other major currencies since Bob Mundell helped create the unified continental currency at an IPO of $1.18 in 1999.

Euro to US Dollar Exchange

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The latest inflation figures show a rapid escalation to a 1% (monthly) rise in the Producer Price Index, which is a 12% annual rate. The major commodity price indexes are soaring at double-digit annual rates. It’s only a matter of time until producer prices translate into consumer prices. The massive amount of cash in the bank accounts of consumers and corporations is just itching to be spent, and when we finally escape our artificial COVID prisons, after the vaccines push us into “herd immunity,” Katy bar the door.

The International Monetary Fund (IMF) has just lifted its 2021 growth forecast for the U.S. by a giant leap forward, from 5.1%, to 6.4%, the fastest U.S. GDP growth rate since 1984, “Morning in America” under Reagan. These are the fruits of the multi-trillion-dollar stimulus packages under Trump and Biden.

Amazingly, official Fed policy is to try to push their favorite inflation metric higher, to 2%. In a Barron’s interview (“A Central Banker on a Mission,” April 12, 2021), San Francisco Fed President Mary Daly, a voting member of the FOMC this year, said “We have struggled for a whole decade…to get inflation up to our 2% goal.” Then she promises, “We always have the tools to pull inflation down if it gets too high.”

File that promise away for future review – or review Paul Volcker’s experiences in 1979-82 to see how he struggled to rein-in double-digit inflation: We had to suffer two recessions that felt like a Depression.

FRED Graph2

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Since we haven’t been able to spend on over-priced restaurants and entertainment, travel or cruises, we’ve saved up a lot of money. We’ve spent a lot on home improvement and new homes (new single-family home sales are the highest since 2006). We’ve also bought more new vehicles (U.S. motor vehicle sales rose at an 18 million annual rate in March, the highest since 2005), but we can’t drive them very far, so we’re itching to spend and travel. The CDC says it’s safe to travel – but others are screaming, “WAIT!”

Put it all together, and we have lots of cash and we’re itching to spend it – a classic formula for inflation.

While you’re waiting, read some history books about inflation, with perhaps a special focus on the 1970s.

P.S. Part of Modern Monetary Theory is that they don’t even need our tax dollars. Isn’t it ironic that we have all this money in the bank and the IRS doesn’t want our taxes on April 15 – for two years in a row?!

FRED Graph3

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

A Look Ahead by Louis Navellier
We Are Now Essentially in Economic Nirvana

Income Mail by Bryan Perry
Taxing Foreign Profits – GILTI As Charged

Growth Mail by Gary Alexander
Inflation Will Roar Again – And Probably Soon

Global Mail by Ivan Martchev
Tuesday’s CPI Numbers Will Be Interesting

Sector Spotlight by Jason Bodner
Is the Stock Market a “Yellow Light Turning Red”?

View Full Archive
Read Past Issues Here

About The Author

Gary Alexander

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander

Important Disclosures:

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.

ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:

  • ETF shares may trade above or below their net asset value;
  • An active trading market for an ETF’s shares may not develop or be maintained;
  • The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
  • The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
  • Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.

Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.

Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.

This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at or by requesting a copy by emailing All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.

FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.