Expert Thinks High Inflation Will Be A New Era Lasting At Least A Decade

[Economy 52,842]

https://fortune.com/2022/10/14/dr-doom-nouriel-roubini-warns-financial-crises-insolvencies-global-recession/

 

An investor is echoing bits that has already been said by many others and that is that the low inflation we got used to from the 1990s up until 2021 is unlikely to return because factors that helped keep inflation low are gone or changing

 

#1. Globalization helped keep prices by creating efficiency where Countries exported more of what they were best at creating economically. Now globalization is not only reaching its limits, but rising protectionist Governments anti free trade are likely to disrupt some of the growth in bulk trading by trying to force stuff more local

 

Also somewhat related, productivity is not rising as fast as it used to be, for prices to drop without productivity gains companies must be willing to give up profits, something that will never happen

 

#2 society is ageing and more people retiring. This can lead to inflation because retired people who don't work still spend money and buy things (even if they have to pull back a bit) but they do not produce anything. This results in more people still contributing to demand but not supply. Although that may be good news for job openings and unemployment rate, it is not good news for the purchasing power of your wages.

 

#3. Climate change will increasingly cause infrastructure and property damage raising costs of repairs and insurance and also make crops less predictable, those food shortages will cause food prices to be high more often than now even

 

Of course there is hardly a consensus on this. Some still believe when pandemic disruptions end and demand imbalance sorts it self out that inflation will come back to the 2% target... Time will tell

[Noah 27,418]

Uhhh, I‘m torn on this. Predicting the economy is so hard. (It always reminds me of how many people talked about crypto and NFT being the future and now they all experienced severe losses).

Also: It wouldn‘t surprise me if by next year there is some loophole that was found by the richer countries to attract young workers from other countries + have cheaper prices. 

[Guest]

[clementine 291]

It’s what we deserve.

[Luc 4,776]

"Experts think... [clickbaity, frightening prospect]"

 

You can find experts for anything in economics. This opinion is very far from the consensus among most economists and investors. 

[Economy 52,842]

1 hour ago, Noah said:

Uhhh, I‘m torn on this. Predicting the economy is so hard. (It always reminds me of how many people talked about crypto and NFT being the future and now they all experienced severe losses).

Also: It wouldn‘t surprise me if by next year there is some loophole that was found by the richer countries to attract young workers from other countries + have cheaper prices. 

It is hard for sure and this could be wrong (and I hope it is)

 

But I wouldn't compare this to NFTs tho... That's market hype trends that are largely phychological...

 

This is macro economics. They are a bit more fundamental than financial market trends and therefore a little easier to predict

 

But yeah even so, it could be wrong

 

But definitely the thing about the ageing population is a given. That will not bode well for purchasing power for sure

[Economy 52,842]

19 minutes ago, Luc said:

"Experts think... [clickbaity, frightening prospect]"

 

You can find experts for anything in economics. This opinion is very far from the consensus among most economists and investors. 

Of course they vary. But by that logic there's no point in ever reporting anything

 

I layed out the reasoning there so u can disect into the reasons

 

Also there may not be consensus over how much inflation we will have and for how long...

 

But there is a broader majority now that seem to agree that at the very least the environment going forward will not be as deflationary as the last 2 decades and that it won't be as easy to keep down.

 

That is the general retoric that rates will have to stay closer to normal now into the foreseeable future even if they reverse partially down the road because inflation now will require more firm stance to keep under control.

 

Not many think we're going back to 1% to 2% inflation while having near 0% interest rates and QE money printing. That deflationary environment is over

[Ivannn 1,150]

And Many others say high inflation is over next year…

[Economy 52,842]

Just now, Ivannn said:

And Many others say high inflation is over next year…

I doubt inflation this high will last too much longer...

 

But I also am on the camp that doesn't think it's going back to the exceptionally easy low inflation we had for over 20 years either cuz there's forces now going against that

 

We probably can keep inflation at 2% or lower if we try hard enough. But from now on it probably can't be done with rates so low like before and monetary policy so loose because inflationary pressures are higher now