GoSeigen wrote:I'm not expecting a general rapid rise in long-term inflation yet, but rather short, very severe spikes in inflation -- pretty much for the reasons you've given.
One year on, and here it is. Will be interesting to see how high it goes.
Anyone who has any doubts that inflation is on its way back need only read the nonsense being written in the media these days, classic example here:https://www.bloomberg.com/europeThe ECB needs to make sure the current market realignment does not get out of hand, especially when it has all the available tools to prevent it. In 2018, for example, the 10-year Italian yield jumped to 3.75% in October from 1.75% in May; a replay of that magnitude would be an epic disaster for the nation’s finances. Lagarde needs to swiftly display leadership akin to Draghi’s “whatever it takes” mantra.
Executive summary: it is the Central Banks' role to print money and buy government securities at ruinously high prices so that their fiscal incontinence will be obscured. This is a drastic change from post 2008 policy, which was to avert deflation by expanding money supply: this policy is to create the illusion that inflation need have no effect on bond yields -- the reductio ad absurdum
in real life of MMT's loony idea that countries can print as much money as they like.
Be warned: all of us will pay for this in rising prices.
France takes over the EU presidency next year and looks like they have some interesting objectives.
1. Transition over the EU's legal/primary language to French
2. Extend the asset purchase programme to print-n-buy up all assets. Having bought up most bonds, then junk bonds then some stocks ... why not just continue that to buy up all stocks and houses. Socialist France expanded to a socialist EU.
Be warned: all of us will pay for this in rising prices
... only if in depreciated currencies, for others it could mean cheaper prices. If your primary currency isn't one that can simply see more being printed/spent that benefits the counterfeiter at the expense of devaluation of all other notes in circulation, then your currency might see greater purchase power (lower prices). Old Money for instance, generational wealth, opt for a combination of land, art, gold "currency". Cash is just the short term conversion of one currency (land, art or gold) into the notes/coins that are just about to be used in exchange for something else (product/service), where typically its best to convert the one that has appreciated the most relative to 'cash'.
Personally not a fan or art, no eye for it, some I'd even throw out in the bin as having been painted by pre-school. Prefer stocks as a substitute. Similar to as advocated by the ancient Talmud millennia ago, land (home), commerce (stocks), reserves (gold). Waves and wanes
but broadly tends to do OK.