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hasn't that been my thesis for the last half year?Tom Mazanec wrote: Fri Dec 10, 2021 6:35 pm https://www.youtube.com/watch?v=_fufBpkJkR0
Inflation Will Peak And Turn To Disinflation, Stagflation Then Deflation.....
4,746 viewsDec 10, 2021
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Uneducated Economist
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This is what I have been telling John and why he is absolutely wrong, what is coming will be markedly inflationary because banks are in fine shape, they didn't need QE to cure the deflation of 2008, we didn't have a deflationary crisis as they thought (as will points out) and now GOVT spending will be continued, amplified, and cause a feedback loop that vince has explained ...It's not just supply chain issues causing inflation. It's labour shortages with pursuant wage inflation that's now becoming baked in. Moreover, once the psychological barrier that prices won't rise is broken and people start to anticipate higher prices, the inflationary cycle feeds itself. We've just gone through that barrier. M2 hit nearly 27% last year and it's still above 13% now...never has so much money been printed for so long, and that's by some margin. The lessons from past crises have been misunderstood or misinterpreted. There was no inflation after the QE post-financial crisis because it was a fundamentally deflationary scenario (people lost jobs and homes and weren't working or spending nearly as much, demand evaporated), and the central banks actually managed to finesse (or fluke) printing just enough to cancel out deflation. They've now made the mistake of applying the same solution and tripling the dosage for the pandemic - which at the start, looked like it might be deflationary (job losses, fear of spending in uncertain times) but infact turned out to be all sorts of inflationary once job retention schemes, stimulus cheques and work from home were all factored fueling huge spending and demand. The fed has inadventently poured inflationary kerosene in the form of unprecedented money printing and rock bottom interest rates on an already fundamentally inflationary crisis. All that M2 will now work its way through the system and come out at a more or less comparable % of inflation as has been put in. And because the fed have gone so far in the wrong direction, it's too late to reposition itself correctly; now that the stimulus is wearing off and growth is slowing, they can't simply put the inflation genie back in the lamp with interest rates at 15% because it would destroy the economy, the stock market, and all the governments that are labouring under so much debt. 0.25% rate rises really aren't going to cut it when inflation cruises past 10%. So instead inflation will be allowed to run hot, and the pandemic damage, kicked down the road last year, will come in the form of a decade of high inflation.