Our Global Inflation Tour Chock Full Of Normal

It really is about abnormality. What I mean by that is, contrary to popular imagination fed by the Fed and other central banks, ever since 2008 the inflation paradigm has changed. The first global financial crisis (GFC1) has proven time and again how it wasn’t a one-off, and since it was a monetary breakdown (global dollar shortage) that’s been permanent the entire global economy involuntarily transformed from modestly inflationary to durably disinflationary (and at times and in some places outright deflationary) where it has remained.

That is now normal, to the eternal consternation of the so-called monetary stewards professing powers they don’t possess who long ago gave up on the concept of money. Money, legitimate economic growth, and ultimately inflation all go together.

These things actually do make a lot of sense when you contemplate the background.

What this further means is that if the world has been removed from 2008-20 normal of disinflation toward or even achieving some new condition of inflation – by whichever means you prefer: fiscal recklessness adding a few more zeroes to prior reckless attempts at rescues; or their non-money monetary counterparts who have done the same thing to their own interventions – we would see these things as clearly becoming abnormal.

We should be able to easily find evidence that this time is different (M2 is just not enough by itself).

We’ll start our inflation tour in China where, also contrary to recent imagination, the Communists aren’t using the neo-Keynesian top-down textbook any longer. They remain focused top-down, sure, but reading from their original Mao rather than the second edition Deng.

Even so, much of the rest of the world has said, hey, look at China booming and find in it the very start of the inflationary reset! Just a few days ago, the Chinese National Bureau of Statistics (NBS) reported that the country’s producer price index (PPI) as well as the purchaser price index for industrial sector firms (factory gate) each gained the most year-over-year in 27 months; the fastest industrial and producer inflation in more than two years.

Good start, right?

In many places around the internet, that’s how this is being described; here cometh Mr. Inflation (with Chinese Characteristics).

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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