Families can not live on their reduced share of the US national income. Corporations and billionaires squeezed the middle class and working class to the point of breaking. Now I expect to see a bounce back in wages. And that will lead to wage-push inflation. And the Fed is in no position to stop it.
Real Estate accounts for 30% of China’s GDP and today it is imploding along with the bonds that supported it. Before the pandemic China had 90 million empty apartments… there will be no more expansion.
Stock Market Valuations at peaks. 2000 bubble: 210% of GDP, 2007 bubble: 188% of GDP, today: 332% of GDP
As is too often the case, conventional thinking is more wishful than wisdom. Inflation is very much alive, and it’s definitely not controlled by central banks. And, importantly, asset inflation and Bubbles pose momentous systemic risk to economic, financial and social stability.
. I believe a major global de-risking/deleveraging dynamic has commenced in China and Asia. U.S. “investors” seem oblivious to the risk posed to our highly speculative markets in equities, corporate Credit and derivatives.
Trillions of new “money” directly into the securities markets is pernicious inflationism and a deleterious redistribution of wealth.
The Fed is delusional if it actually believes it has anchored inflationary expectations.
Why have Treasury and global bond yields been collapsing in the face of surging inflation? The faltering Chinese Bubble. The Faltering Chinese Bubble! Fragile global Bubbles!!! “Hey Doug, you’re on mute.”
We’ve witnessed since March 2020 a QE program that, rather than accommodating deleveraging, actually spurred further speculative leverage.