Inflation Is Not Coming Back, It Has Been There For Twenty Years!

Board, Blackboard, Economy, Inflation, Money

Image Source: Pixabay

There is some debate as to whether or not inflation is coming back, but it has actually been around for a long time. What is new is that it is becoming more widespread.

Money printing causes prices to rise, that's how it is, and the central banks' printing presses have been active since the beginning of the 2000s (interest rates fell following the crash of Internet stocks in 2000 and then the attacks of September 11, 2001). It was reinforced with the subprime crisis of 2008, before reaching delirious levels since the Covid pandemic and the lockdowns.

Except that, until now, this rise in prices was localized in assets - we are talking about asset inflation - such as stocks or real estate. International competition was pulling prices down, notably with China's entry into the World Trade Organization in 2001, opening up Western markets (money printing and China's entry into the WTO occurred in the same year... let's say that this coincidence was a good one). The deflation of many goods (textiles, household appliances, electronics, etc.) has resulted in a transfer of factories from Europe and the United States to Asia. This is collateral damage. But the stock markets are doing very well, as is real estate, like in Germany where prices are remarkably in line with the size of the ECB's balance sheet:

In France, the rise in real estate prices began in the early 2000s. Official statistical organizations have not measured an increase in the rate of inflation because they reduce the share of housing. Indeed, they consider that the acquisition of the primary residence constitutes an investment and that it does not have to appear in the "consumer price index". This is a highly questionable position, given that this purchase represents a normal step for most households. Moreover, it is not an investment, since it does not yield any return; it even costs money in maintenance and taxes.

1 2
View single page >> |

Disclosure:, all rights reserved

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.