Famous macroeconomist Erian (Mohamed El-Erian) Friday (March 19) interviewed by Yahoo Finance, he believes that the U.S. Federal Reserve may lose control of the bond market, market liquidity may appear to be insufficient, but the U.S. economy will still grow in the future under high Inflation.
Erian is Allianz (Allianz) chief economic adviser, he pointed out that the U.S. economy is currently in an unusual situation, on the one hand, the overall economy is still in trouble, but in the Federal Reserve continued to implement loose monetary policy, the Philadelphia region in March business activity index rose to the highest level since 1973, the volatility of risk assets also increased; he also pointed out that future investors must be concerned that whether the Fed will lose control of the bond market, which will lead to a complete shift in market investment psychology, which in turn will affect the U.S. economy.
According to Reuters, Germany may use more than 60 billion euros in additional fiscal spending this year in response to the Communist virus (new coronavirus) Epidemic, resulting in a record high debt issuance for the year, totaling more than 240 billion euros; Germany issued bonds last year to raise 130 billion euros in funds as a measure to support the economy, the scale has hit a record high.
In the world’s major economies are bottomless debt release situation, the market has been expected to inflation will rise significantly, and the Federal Reserve has continued to shout for inflation, said that higher inflation rates can be tolerated, Treasurer Yellen also said that the $1.9 trillion stimulus economic harm is not enough to fear, all signs show that the Federal Reserve may want to push inflation to a higher level, and then reset the value of the currency to dilute The U.S. government’s huge debt.
In short, the future of high inflation in line with the Fed’s “sheep shearing” strategy, but whether high inflation can be tamed to avoid causing economic volatility, internal turmoil and asset price volatility, etc., remains to be seen.
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