Fick tips via Cornucopia idag om Deutsche Banks rapport “What’s in the tails?”. Tänker att det passar väl in i diskussionen kring avsnittet med Eric Strand som vi släppte idag.
- #205 och #206 - Eric Strands hussyn om inflation, pris vs värde och skuldbubblan | Reklam för AuAg Fonder AB
- https://rikatillsammans.se/allt-som-har-ett-pris-kan-man-spekulera-i/
Här är en länk till rapporten
Deras sammanfattning
We worry that inflation will make a comeback. Few still remember how our societies and economies were threatened by high inflation 50 years ago. The most basic laws of economics, the ones that have stood the test of time over a millennium, have not been suspended.
An explosive growth in debt financed largely by central banks is likely to lead to higher inflation. We worry that the painful lessons of an inflationary past are being ignored by central bankers, either because they really believe that this time is different, or they have bought into a new paradigm that low interest rates are here to stay, or they are protecting their institutions by not trying to hold back a political steam roller.
Whatever the reason, we expect inflationary pressures to re-emerge as the Fed continues with its policy of patience and its stated belief that current pressures are largely transitory. It may take a year longer until 2023 but inflation will re-emerge. And while it is admirable that this patience is due to the fact that the Fed’s priorities are shifting towards social goals, neglecting inflation leaves global economies sitting on a time bomb.
It is a scary thought that just as inflation is being deprioritised, fiscal and monetary policy is being coordinated in ways the world has never seen. Recent stimulus has been extraordinary and economic forecasting, which is difficult at the best of times, is becoming harder by the day. Fractured politics amplifies the problem. Needless to say, the range of global outcomes over the coming years is wide.
When central banks are eventually forced to act on inflation, they will find it themselves in a difficult, if not untenable, position. They will be fighting the increasingly-ingrained perception that high levels of debt and higher inflation are a small price to pay for achieving progressive political, economic and social goals. That will make it politically difficult for societies to accept higher unemployment in
the interest of fighting inflation.
Från rapporten kan man klippa många spännande citat. Bl.a.
As we step into the new world, we are no longer sure how much of what we thought we understood about financial and macro-economics is still valid. We have lived through a decade of extraordinary and unconventional monetary stimulus to prevent economies from sliding into deflation, but this effort barely succeeded in propping up growth at what have been historically low levels.
The most immediate manifestation of the shift in macro policy is that the fear of inflation, and of rising levels of government debt, that shaped a generation of policymakers is receding. Replacing it is the perspective that economic policy should now concentrate on broader social goals. Such goals are as necessary as they are admirable.
The pandemic has accelerated this shift in thinking. Sovereign debt has risen to levels unimaginable a decade ago with large industrial countries exceeding red-line levels of 100% of GDP. Yet, there is little serious concern about debt sustainability on the horizon from investors, governments or international institutions. Similarly on inflation, the vast majority of central bankers and economists believe any rise in prices away from the historically-low levels of the last decade will be transitory. It is assumed that base line effects, one-offs, and structural forces will continue to suppress prices.
So two of the biggest historic constraints on macroeconomic policy – inflation and debt sustainability – are increasingly perceived as not binding.
In short, we are witnessing the most important shift in global macro policy since the Reagan/Volcker axis 40 years ago. Fiscal injections are now “off the charts” at the same time as the Fed’s modus operandi has shifted to tolerate higher inflation. Never before have we seen such coordinated expansionary fiscal and monetary policy. This will continue as output moves above potential. This is why this time is different for inflation.
Yet we worry that in its new inflation averaging framework, the Fed will be too slow to damp the rising
inflation pressures effectively. The consequence of delay will be greater disruption of economic and financial activity than would be otherwise be the case when the Fed does finally act. In turn, this could create a significant recession and set off a chain of financial distress around the world, particularly in emerging markets.
History is not on the side of the Fed. In recent memory, the central bank has not succeeded in achieving a soft landing when implementing a monetary tightening when inflation has been above 4%. Policymakers are about to enter a far more difficult world than they have seen for several decades.
With less ability to spend their extra cash, Americans have saved. In fact, US savings rates have hit levels not recorded in more than seven decades of available data. At its peak in April 2020, more than a third of disposable income was being saved. Even the lowest savings rate during the pandemic, 13%, was still above any level seen since the early 1980s. As a result, the total amount of excess savings has reached over $2tn, or more than 10% of GDP.
Consumers will surely spend at least some of their savings as economies reopen. This raises the very real spectre of consumer-driven inflation. To judge the impact on the economy, assume that 25% of the increase in savings is spent over the next 18 months.
The Fed’s move away from pre-emptive action in its new policy framework is the most important factor raising the risk that it will fall well behind the curve and be too late to deal effectively with an inflation problem without a major disruption to activity.