MBMG Update | Inflatiophobia💸
To a man with a hammer, everything looks like a nail…
To central bankers, who have never seen such a dramatic supply shock in their careers, all inflation is assumed to be excess demand
For the 2 years of the pandemic (2020 & 2021), global economic growth is likely to have stagnated at just over 1% per year. There will have been significant variations, with China expected to have grown almost 10% in aggregate during the 2 years, while America is expected to have grown very marginally, perhaps less than 0.2% per year and the EuroZone is expected to have contracted by 4% or more in total over the period
Because of this, we’re concerned that global growth is extremely fragile and that the removal of the exceptional policy support that enabled even such anaemic growth during the pandemic, will lead to a dangerous economic slowdown. Policymakers on the other hand seem more concerned about the inflation that we have seen from supply and logistic issues and intend to tackle this most aggressively in countries and regions where demand has clearly not yet recovered, such as USA and the Eurozone.
Why are they embarking on such a seemingly reckless course?
To a man with a hammer, everything looks like a nail…
To central bankers, who have never seen such a dramatic supply shock in their careers, all inflation is assumed to be excess demand
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About the Author:
Paul Gambles is licensed by the SEC as both a Securities Fundamental Investment Analyst and an Investment Planner.
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