I suspect that the injection of liquidity that many are pointing to as a reason for inflation are stuck in 1979.
With a decade of nearly 0% percent inflation for most things and a matching effective interest rate, with the amount of cash floating around on corporate balance sheets, we should have ALREADY seen late 70’s style inflation by 2017.
It has not happened and I don’t believe it will. People that still have millions of other people’s and their own money to invest are still committing BILLIONS to fixed income assets yielding...
2.2% for 30 year BONDS (University of Texas last week)
Dallas ISD just issued $150 Million of competitive paper. True Interest Cost of 67 BASIS POINTS; the 20 year terms are yielding 1.6%.
When the market for TIPS starts leading on Bloomberg, inflation will be reality. Until then, meditate on what happens to this “liquidity” when it flows through the economy once or twice and then ends up on a bloated balance sheet with nothing but financial instruments for all that cash to get turned into. Think about what that would look like. You would see Equity Prices and Bond Prices doing what they have done since 2008 (to the moon) and prices for clothing, entertainment, vehicles, and food (the stuff we all use) increase modestly or not at all over the same span.
The economic models and theory we grew up with never anticipated that in an economy with 340 MILLION participants, would end up with about 800,000 households and corporations controlling 60% of the system wealth. And when those folks are done buying solid gold plumbing fixtures for their 8th mansion, WTH are they trickling down, exactly?
“we should have ALREADY seen late 70’s style inflation by 2017”
People have used a lot of their money to inflate the prices of stocks and houses, and the stuff that goes into houses.
The price rise of housing wood leaves late 70’s inflation in the dust.
The price of landscape plants is up a lot.
Food quality has gone down significantly for most food products.
The only quality increase is in meat.
In my youth, all spices I could buy were of good quality.