The Biden administration keeps saying the inflation is transitory but most economists are now saying it is not. Young and middle-aged people have no clue as to what this means. They didn’t live through the Carter era or, if they did, they were too young to realize how awful it was for so many people.
In a recent op-ed in the Financial Times, El-Erian, who is one of the most widely followed economists, said central banks and markets need to “widen their perspective” to avoid significant damage to the economic and financial system.
El-Erian wrote, “It is not often that I take a very strong view that runs directly counter to the market consensus.”
“I WORRY A GREAT DEAL”
“I do worry a great deal, however, about the widespread conviction that the current rise in inflation will be transitory,” he wrote.
El-Erian stated there’s “all the on-the-ground evidence of structural changes in supply at a time when aggregate demand will remain robust.”
“To be clear, I do not expect a return to the inflation of the 1970s. But we have to respect the possibility of a shock to a financial system that has been conditioned and wired for the persistence of lower and more stable inflation,” he said.
El-Erian is president of Queens’ College at Cambridge University. He previously chaired President Barack Obama’s Global Development Council.
After decades of nearly zero inflation in the country, many investors have little idea about two historical dynamics, El-Erian warned.
“First, seemingly one-off increases in prices can cascade through the system,” he said. “Second, a rise in inflation can be persistent, starting with commodities and prices at the factory gate only to end up in consumer prices and wages.”
This would be a real tragedy. Biden was left with a booming economy.
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The enlightened being comrades have spoken, you’ll own nothing and like it, serf.
This is the golden great leap forward Wakandastan utopia commencing.
It is a solid gold today Georgia and tomorrow the world utopia and it will last for 1000 years.
(not really)
If you’re not buying hard assets, you will have nothing when the music stops. When Carter Stagflation started, people bought everything they could on credit. Then the cost of money went through the ceiling. A house loan was like 17% at one point and credit cards above 30%. Money was becoming worthless and wages were flat. Many people saw their saving just disappear. But as usual the rich were taken care of by the Government, The rich were bailed out again in 1987, 1999, 2008, and last year. Bezos was worth about $103 Billion in 2019 before Covid and today is worth around $190 Billion. How many people in the middle class almost double their net worth in 18 months. A lot of Billionaires have and they pay a lower percentage in taxes than you do. Most Billionairies make their money because of sweet heart tax deals and Government regulations. During Covid, small business was shut down while Big Business made record profits. Trump had to go because he was a threat. He was removing regulations that hindered small business. Big Business didn’t like the competition. The Federal Government is setting the stage for people with wealth to drain the Working Class dry – if we don’t stop the Federal Government and Big Tech! Democrats can only stay in power if people are dependent on Government and their plan is to make you totally dependent on Government for every aspect of your life.