Posted on 06/09/2021 12:45:32 PM PDT by RomanSoldier19
Inflation may look like a problem that will go away, but is more likely to persist and lead to a crisis in the years ahead, according to a warning from Deutsche Bank economists.
In a forecast that is well outside the consensus from policymakers and Wall Street, Deutsche issued a dire warning that focusing on stimulus while dismissing inflation fears will prove to be a mistake if not in the near term then in 2023 and beyond.
The analysis especially points the finger at the Federal Reserve and its new framework in which it will tolerate higher inflation for the sake of a full and inclusive recovery. The firm contends that the Fed’s intention not to tighten policy until inflation shows a sustained rise will have dire impacts.
“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,” Deutsche’s chief economist, David Folkerts-Landau, and others wrote. “In turn, this could create a significant recession and set off a chain of financial distress around the world, particularly in emerging markets.”
As part of its approach to inflation, the Fed won’t raise interest rates or curtail its asset purchase program until it sees “substantial further progress” toward its inclusive goals. Multiple central bank officials have said they are not near those objectives.
(Excerpt) Read more at cnbc.com ...
When the cost of money rises 4%, the US will be in big, big, trouble.
30 years ago, we could handle it. Today? No so much.
I have to believe that the economy will suffer and Congress will shift in 2022 and Trump will be re-elected in 2024 to clean up what will be a massive mess that not even the media will be able to cover up.
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Not even the media will be able to cover up???
Cover it up??
Why would they do that when they will blame him for it?
“When the cost of money rises 4%, the US will be in big, big, trouble.”
Would the savings and CD rates go up if this happens?
So.... if inflation is in the cards what would I do different?
Hard assets will remain hard assets: metals, real estate
I think product related stocks will respond with price increases more quickly then service related stocks thereby retaining more of their value.
I’ll have to go back and look at the late 70s/early 80s to see which stocks performed better in relation to the overall market to be sure.
The best move might be a combination of TIPS and Real Estate where the loans on real estate are paid back with devalued cash.
Not immediately. There is a delay as the banks soak up the net margin. Only when other banks start to take away business will the rates start to move. And those rates will never keep up with the “transitory” inflation.
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