Since this year, global commodity and food prices continue to soar, the recent dry bulk freight rates have hit a new high of more than 10 years, coupled with a shortage of electronic products necessary chips, indicating that a hundred things tens of expensive times soon to re-appear, the potential risk of inflation is by no means as mild as the U.S. Federal Reserve Chairman Powell understatement.
In summary, there are at least two major reasons for the rapid rise in inflation. First, since the global outbreak of the epidemic last year, many companies have scaled back production capacity, until now many places have started vaccination, the economy has gradually returned to normal, demand has rebounded slightly, but has stopped production capacity can not be restored at once, and the epidemic repeatedly, companies are cautious in increasing capital expenditure, resulting in a shortage of supply and demand linger. In addition, many regions to enhance the level of environmental protection and limit pollution, disguised compression of supply capacity, in recent months, cement, aluminum, steel and other building materials and bulk commodity prices soared not without reason.
The second is the intensification of the Sino-US technology war last year, disrupting the global supply chain, a number of industries facing chip shortages, especially in the automotive industry, coupled with the experience of this “chip shortage”, the response of countries is not “globalization” to cooperate in mass production, but listed as The “national security issue”, ask each family to clean up their own snow, how can be resolved in the short term? The additional cost will eventually be transferred to the end product, the consumer only “hard food”!
Strangely enough, even though the facts are in front of us, Powell still repeatedly stressed that inflation is under control, completely ignoring the side effects of the Biden administration’s heavy-duty stimulus. In contrast, Canada, which borders the United States, is much more honest, and the central bank has recently disclosed a timetable for reducing debt purchases this year, and is expected to raise interest rates next year. Many emerging economies have taken the lead in recent months to raise interest rates to combat the rise in real inflation. Powell, known for his prudence in the past, is unlikely to be vigilant, and in view of today’s geopolitical situation, it is inevitable to speculate that deliberately “flooding” the world is its economic warfare tactic, with the aim of a future surprise attack, a net into a capture.
In the end, the United States long-term ultra-low interest rates and debt-buying program, will force prices to rise, and the recovery after the epidemic and the global economic and trade war and other factors, it has become a catalyst for the reappearance of reflation, because the economic rebound can not keep up, the fear of forming “stagflation”, the 1970s “stock and bond double kill The 1970s “stock and bond double-crash” is an example, affecting countless companies and families around the world. Skills level is not high at the grassroots level, salaries will be increasingly missing to make the day more difficult, because basic goods are often the first to raise prices; even rich people, including stocks and buildings and other asset prices have long been full of bubbles, once inflation far exceeds expectations, intensify the rate of interest rate hikes, asset prices will quickly contract, ready to put on the “people trampling on people” tragedy .
According to the current market projections, the public will be obvious in September this year at the earliest to feel “everything together”. If it is said that the financial market will rise unusually in 2020, will this year’s script be just the opposite?
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