Powell Will Rue The Day He Used The Word Transitory10 Sep 2021 11:49
Hi Hydro..I totally respect what you write but as an alternative I have to tell you I cannot totally agree with your above headline.
The Fed have engineered the current rise in interest rates to wipe out the true cost of the enormous debt of Uncle Sam..We now have negative interest rates by the back door and same for 10 year treasuries…If you wonder why ,it’s simple.
If you are paying interest on a loan of 2% but inflation is 4%, you have a negative interest rate of 2%, or in other words , inflation is reducing your debt by 2% annually; great if you are a borrower, not so good if you are a retiree on a fixed income.
Whilst, I expect rates of inflation to reduce in the next 12 months, we could dangerously enter a period of negative hyperinflation , or what is known as a deflationary bust.
In a deflationary bust, prices , demand and supply all fall …we are in that period right now, with supermarkets unable to get full stock for their shelves due to the shortage of lorry drivers , this is affecting supply, but also inflationary for the big additional wages paid to lorry drivers, HGV manufacturers and others workers …the end result is I do not think within 2 or 3 years we will see hyperinflation, rather deflation .However, both types of inflation are dangerous for society and once either takes hold The Fed, BOE or Euro Central Bank , will be unable to stop either…For us here, the safe heaven of Gold will rocket, as investors will lose confidence in their bank or building society and rush to buy gold or more likely buy into gold shares like GGP.
Watch this space for hyperinflation or deflation…of the 2 , I think deflation is more likely but not yet..Hydrogen, I suspect you will disagree , but I hope my words above gives an alternative view.