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Inflation will continue to rise. Interests not so much.
ECONOMY - 01/10/2022

Lately we’ve been led astray over and over again by supposed ‘experts’ with decades of experience who can’t seem to stop making colossal mistakes. Not only individuals, big institutions too.
Champion institutions of errors has been the central banks. Despite its leaders’ decades of experience, they completely failed to predict that their policies over the past few years would have any consequences. It’s extraordinary.


Those people honestly thought that they could print trillions of dollars and euros, keep interest rates at 0%, and that there would never be any consequences until the end of time.


And then, when inflation began to take hold last year, they failed to recognize it. They bullied people who pointed it out. Later, when they finally did acknowledge inflation, they insisted it was transitory. And then when the term transitory went permanent, they promised to do something about the growing inflation problem… eventually.


Finally, in March 2022, USA made a very ceremonial 0.25% interest rate increase. But now the tune has changed. Now their policies smack of panic and desperation, and they sound like they’re running around with their hair on fire with no clue what to do next. It hardly inspires confidence.
Central banks have enjoyed unparalleled respect and gravitas for the past 30 years. Going back to Alan Greenspan in the 1990s, central bankers have been viewed as infallible superheroes who always know what to do. Now they just look like a bunch of amateurs.


There’s NO WAY they’ll follow through on their interest rate increases. Simply put, continuing to do so will bankrupt their governments as they are in debt. Specially USA with their multi trillion dollars debt. If interest rate rises too much, all tax money will be spent on loans. And it is not only about loans. Funds, pension funds for example, will deteriorate.


Most of the governments around the world are sitting on high debts, so they do not dare to rise the interest too much.


Ultimately this means that inflation is here to stay and rise. And that interest rates will be moderate.
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Views: 451646 - Atualizado: 23-04-2024