Inflation is no longer a fringe concern.
It’s now something that even serious mainstream commentators – you know, the sorts given to harrumphing dismissively when anyone suggests that the authorities might not know what they are doing – are taking seriously.
The main question for investors now is – what will the world’s central banks do about it? And what does that mean for your money?
Inflation is always and everywhere a political phenomenon
The FT’s Martin Wolf points out that today’s biggest inflationary risk stems not from the economic situation as such (referring to the fact that you can quibble all day about short-term unemployment figures and base effects and the rest of it), but from the change in political direction.
February 26, 2021 | The Federal Reserve is Both Arsonist and Firefighter
Hilliard MacBeth Author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash
The stance of the Federal Reserve chair, Jerome Powell, as confirmed publicly this week, is for continued support for the economy, as 10 million jobs are still missing.
A year ago the Fed lit a fire under prices for assets like stocks with its expansion of credit and extremely low interest rates.
At some point the Fed will start to worry about inflation and try to put out that fire.
Will the Fed keep pouring gasoline on the fire?