‘Stagflation is much more likely than Deflation – prepare accordingly..’
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Economic matters remain in the news:
Stagflation is much more likely than Deflation – prepare accordingly..
May 9, 2023
This morning: The Market Commentariat think deflation will counter inflation, rates will fall, and recession will be limited. The world is more complex – supply side factors are more volatile. Stagflation is a more likely outcome than recession. …
This week will be dominated by inflation. Just how sticky will US core inflation look when we get CPI tomorrow? The market risk is inflation across the West proves more persistent than the market bulls have been praying for. We might be headed for something different and much worse– recession and sticky prices in some economies; Stagflation! …
The professional market commentariat of economists, analysts and guessors, are largely talking about deflation – that interest rates will shortly come down in line with inflation as a result of downwards pressure on prices. Reasons for them to think inflation will fall include the slowing economy, declining demand for goods and services as a result of crashing discretionary consumer spending, but also that recession will be limited by the reopening of the global economy and supply chains post-Covid (particularly in China), boosting the supply of cheap goods. There is a general expectation spikes in food and commodity prices will reverse in much the same way as energy prices. And, the collapse in “broad money” “M2” is seen by the monetary augurs as proof positive that prices must fall.
Conventional thinking for unconventional times.
Wishing for deflation to magic away the present raft of troublesome economic issues is not a good strategy. It falls into the same bucket of misplaced hopes as Central Banks telling us how “transitory” inflation would be last year. Conventional wisdom says inflation can only be addressed by higher rates – any phule know that! But real interest rates are still negative – clearly unaddressed. …
Inflation is a consequence of mismatched demand and supply.
We pretty much know what will demand will be – that’s why companies, banks and governments employ legions of researchers to measure and determine demand and thus what they produce and supply. …
Supply is more volatile. It’s the cost of producing things that’s the primary variable in an economy. Key components in production costs include the price of labour and materials. …
As the current slew of strikes in the UK and across Europe highlight, workers are complaining they are not paid enough to meet basic needs.
What does it all mean: Deflation or Stagflation?
Strip if down to the basics and I doubt we are in a deflationary environment – that is just too simple a view of the complex global economy.
Global supply chain uncertainty and reinvention, shifting trade patterns, commodity volatility, and labour shortages will keep prices unstable for longer. I suspect inflation remains highly elevated for longer. https://morningporridge.com/blog/blains-morning-porridge/stagflation-is-much-more-likely-than-deflation-prepare-accordingly/
Policies of governments around the world related to COVID, printing money, sanctions, the Russia-Ukraine conflict, and trade matters set this situation up.
And yes, we are in dangerous economic times and people should take appropriate action.
What about stagflation?
Here is some information about that:
In economics, stagflation or recession-inflation is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actions intended to lower inflation may exacerbate unemployment. …
he term stagflation, a portmanteau of stagnation and inflation, was first coined during a period of inflation and unemployment in the United Kingdom. The United Kingdom experienced an outbreak of inflation in the 1960s and 1970s. Inflation rose in the 1960s and 1970s, UK policy makers failed to recognise the primary role of monetary policy in controlling inflation. Instead, they attempted to use non-monetary policies and devices to respond to the economic crisis. Policy makers also made “inaccurate estimates of the degree of excess demand in the economy, [which] contributed significantly to the outbreak of inflation in the United Kingdom in the 1960s and 1970s.[3]
Stagflation was not limited to the United Kingdom, however. Economists have shown that stagflation was prevalent among seven major market economies from 1973 to 1982.[6] After inflation rates began to fall in 1982, economists’ focus shifted from the causes of stagflation to the “determinants of productivity growth and the effects of real wages on the demand for labor” … the government can cause stagflation if it creates policies that harm industry while growing the money supply too quickly. (Stagflation. Wikipedia, accessed 01/14/22)
I remember when stagflation was a concerning factor in the early 1980s.
ZeroHedge posted the following at the beginning of the year:
2023. Stagflation After Failed Stimulus.
January 1, 2023
After more than $20 trillion in stimulus plans since 2020, the economy is going into stagnation with elevated inflation. Global governments announced more than $12 trillion in stimulus measures in 2020 alone, and central banks bloated their balance sheet by $8 trillion. …
If Keynesian multipliers existed, most developed economies would be growing strongly even discounting the Ukraine invasion impact, considering the unprecedented amount of stimulus plans approved.
Now we face a 2023 with even more disappointing estimates. According to Bloomberg Economics, global growth will decline from a poor 3.2% in 2022 to a worrying 2.4% in 2023, significantly below the pre-covid-19 trend but with higher global debt. Total global debt rose by $3.3 trillion in Q1 2022 to a new record of over $305 trillion-mostly due to China and the U.S., according to the IIF.
However, consensus estimates show an even worse outlook. Global growth should stall at +1.8%, with the euro area at zero growth and the United States at just 0.3%, with inflation reaching 6% globally, 6.1% in the euro area, and 4.1% in the United States.
Only a handful of countries are expected to reduce debt in 2023, with most nations continuing to finance bloated government spending with elevated deficits and tax hikes. A world where governments are constantly eroding the purchasing power of currencies and slashing disposable income of taxpayers with rising taxes is likely to show weaker growth trends and worsening imbalances.
The narrative all over the world is to try and convince us that past-peak but elevated inflation is “falling prices” and that everything is good when debt increases, growth stalls and the purchasing power of salaries and savings is wiped out slowly.
There is no success in stagflation. It is a process of impoverishment that hurts the middle classes immensely while the excessive government spending is never curbed.
2023 is expected to be the year of stagflation. Of course, most strategists are betting on inflation falling rapidly in the second part of the year, but that seems inconsistent with their estimates of deficit spending and growth. …
The uncomfortable reality is that nations have created a long-lasting decline by pushing the limits on demand-side policies and government intervention. https://www.zerohedge.com/markets/2023-you-wanted-endless-stimulus-you-got-stagflation
The World Economic Forum (WEF) posted the following last September:
The risk of stagflation
“The central banks are still being very clear about their mandate, they are absolutely fixated on bringing inflation back towards their targets, and that is taking priority over the growth dynamics … It is acting as a backstop, and it’s also why having these independent central banks is so important.”— Guy Miller, Chief Market Strategist and Head of Macroeconomics, Zurich Insurance
Adrian Mock: Thanks, Santi. Got some questions here from some journalists. Andrew Edgecliffe-Johnson from the Financial Times has a couple of questions to put to the panel. Firstly, where do you see the most pronounced risks for stagflation? And secondly, is it the panel’s view that we’re entering a new economic regime in which inflation remains more elevated than in the past, and where we’re subject to more volatile supply chain issues on a sustained basis? So a couple of very big questions there from Andrew at the FT. Guy, do you want to jump in first on stagflation?
Stagflation
Guy Miller: Well, I guess in terms of the region most vulnerable — I would say it is the Eurozone. It is a region that has typically lower trend growth. And as a result of that, it’s always inevitable that that growth dynamic is going to be at risk. And what we’re seeing here is a combination of that slower trend growth, combined of course with this exogenous shock in terms of the energy component.
So I think it’s fairly clear that certainly for probably the coming year that this region is going to fit that definition of stagflation. …
I think the goods sector is going to be running a little bit higher than we’ve seen in the past for various structural reasons around geopolitics and trade. But I think it is going to be more marginal. It’s still going to be around these targets, even if they are slightly more on the higher side rather than the lower side. So, yes, but to a lesser extent, I think to answer the question.
Adrian Monck: And Rima, do you share that view from Guy there on some of those risks?
Rima Bhatia: Yes. I think well, if we talk about inflation first. I think ultimately the central banks are going to have to tolerate a higher level of inflation. I mean, how far can they raise rates before bringing inflation down to that 2%? I mean, I think that’s no longer realistic in today’s world. 09/30/22 https://www.weforum.org/agenda/2022/09/chief-economists-outlook-inflation-recession-sept-2022/
So, the WEF is expecting stagflation as well as higher than 2% inflation rates. Many in the USA share that view.
This will not end well for the USA or its dollar.
This debasing of the value of currency (called “dross” anciently), which is what the USA has been doing with its official debt and the Federal Reserve’s quantitative easing policies, is condemned in the Bible.
4 Take away the dross from silver (Proverbs 25:4a).
22 Your silver has become dross, Your wine mixed with water. (Isaiah 1:22)
25 I will turn My hand against you, And thoroughly purge away your dross, And take away all your alloy. (Isaiah 1:25)
18 “Son of man, the house of Israel has become dross to Me; they are all bronze, tin, iron, and lead, in the midst of a furnace; they have become dross from silver. 19 Therefore thus says the Lord God: ‘Because you have all become dross, therefore behold, I will gather you into the midst of Jerusalem. 20 As men gather silver, bronze, iron, lead, and tin into the midst of a furnace, to blow fire on it, to melt it; so I will gather you in My anger and in My fury, and I will leave you there and melt you. 21 Yes, I will gather you and blow on you with the fire of My wrath, and you shall be melted in its midst. 22 As silver is melted in the midst of a furnace, so shall you be melted in its midst; then you shall know that I, the Lord, have poured out My fury on you.’” (Ezekiel 22:18-22)
Although the Bible warns against using dross and diluting the money supply, many modern ‘experts’ have a different view. The wrong views on economics will lead to economic problems and ultimately the total crash of the dollar of the USA.
The truth is that the USA is setting itself up for massive inflation, as well as food shortages.
Related to inflation, the Continuing Church of God (CCOG) put together the following video:
Inflation: When Money Fails
Inflation has been higher in 2022 than it has been for decades in the USA, Europe, and many other lands. What are some of the disruptions that inflation can cause? What about hyperinflation affecting places like Venezuela? Did the Book of Haggai predict inflation? Is food price inflation associated with the ride of the third horseman of the Apocalypse? Does sin and government mismanagement cause inflation? Are there physical things one can do about inflation? What about storing food or buying gold? Will gold outlast the USA dollar? Why might some throw their gold in the street as Ezekiel prophesied? What should God’s people do about inflation? What did Jesus teach about food worries? What about seeking the Kingdom of God? Steve Dupuie and Dr. Thiel cover these matters.
Here is a link to our video: Inflation: When Money Fails.
If governments would not have printed up so much debt money for political and other reasons, inflation would not be as much of an issue. But because many have, stagflation looks much more likely.
Slowing down the economy to deal with inflation by raising interest rates causes other problems.
Hyperinflation will hit the USA.
And while we are NOT there yet, its results, including increasing USA debt, will be worse than almost anyone realizes (cf. Habakkuk 2:6-8).
National repentance is needed, but is not expected (Hosea 11:3a, 5b-7)–but you can repent if you respond to God’s calling.
Some items of possibly related interest may include the following:
Might the U.S.A. Be Gone by 2028? Could the USA be gone by the end of 2028 or earlier? There is a tradition attributed to the Hebrew prophet Elijah that humanity had 6,000 years to live before being replaced by God’s Kingdom. There are scriptures, writings in the Talmud, early Christian teachings that support this. Also, even certain Hindu writings support it. Here is a link to a related video: Is the USA prophesied to be destroyed by 2028? In Spanish: Seran los Estados Unidos Destruidos en el 2028?
Is God Calling You? This booklet discusses topics including calling, election, and selection. If God is calling you, how will you respond? Here is are links to related sermons: Christian Election: Is God Calling YOU? and Predestination and Your Selection; here is a message in Spanish: Me Está Llamando Dios Hoy? A short animation is also available: Is God Calling You?
Christian Repentance Do you know what repentance is? Is it really necessary for salvation? Two related sermons about this are also available: Real Repentance and Real Christian Repentance.
The End of US Dollar Dominance Is the USA losing its economic status? What about the petro-gold-yuan? A related video is also available: US Dollar being challenged by Gold-Petro-Yuan.
Who is the King of the West? Why is there no Final End-Time King of the West in Bible Prophecy? Is the United States the King of the West? Here is a version in the Spanish language: ¿Quién es el Rey del Occidente? ¿Por qué no hay un Rey del Occidente en la profecía del tiempo del fin? A related sermon is also available: The Bible, the USA, and the King of the West.
USA in Prophecy: The Strongest Fortresses Can you point to scriptures, like Daniel 11:39, that point to the USA in the 21st century? This article does. Two related sermon are available: Identifying the USA and its Destruction in Prophecy and Do these 7 prophesies point to the end of the USA?
When Will the Great Tribulation Begin? 2023, 2024, or 2025? Can the Great Tribulation begin today? What happens before the Great Tribulation in the “beginning of sorrows”? What happens in the Great Tribulation and the Day of the Lord? Is this the time of the Gentiles? When is the earliest that the Great Tribulation can begin? What is the Day of the Lord? Who are the 144,000? Here is a version of the article in the Spanish language: ¿Puede la Gran Tribulación comenzar en el 2020 o 2021? ¿Es el Tiempo de los Gentiles? A related video is: Great Tribulation: 2026 or 2027? A shorter video is: Can the Great Tribulation start in 2022 or 2023? Notice also: Can Jesus return in 2023 or 2024? Here is a video in the Spanish language: Es El 2021 el año de La Gran Tribulación o el Grande Reseteo Financiero.
Does God Have a 6,000 Year Plan? What Year Does the 6,000 Years End? Was a 6000 year time allowed for humans to rule followed by a literal thousand year reign of Christ on Earth taught by the early Christians? Does God have 7,000 year plan? What year may the six thousand years of human rule end? When will Jesus return? 2031 or 20xx? There is also a video titled 6000 Years: When will God’s Kingdom Come? Here is a link to the article in Spanish: ¿Tiene Dios un plan de 6,000 años?
The Plain Truth About Gold in Prophecy. How Should a Christian View Gold? What do economists and the Bible teach about gold? Gold and silver may drop in value. Inflation/deflation? What do Christians need to know about gold?
Is a Great Reset Coming? Klaus Schwab of the World Economic Forum has proposed a societal change that has been basically endorsed by the Vatican and many world leaders. Does the Bible prophesy a major reset? Here is a link to a related video: Will there be a “Great Reset”?
The Gospel of the Kingdom of God This free online pdf booklet has answers many questions people have about the Gospel of the Kingdom of God and explains why it is the solution to the issues the world is facing. Here are links to four related sermons: The Fantastic Gospel of the Kingdom of God!, The World’s False Gospel, The Gospel of the Kingdom: From the New and Old Testaments, and The Kingdom of God is the Solution.
Biden-Harris: Prophecies and Destruction Can the USA survive two full presidential terms? In what ways are Joe Biden and Kamala Harris apocalyptic? This book has hundreds of prophecies and scriptures to provide details. A Kindle version is also available and you do not need an actual Kindle device to read it. Why? Amazon will allow you to download it to almost any device: Please click HERE to download one of Amazon s Free Reader Apps. After you go to your free Kindle reader app (or if you already have one or a Kindle), you can go to: Biden-Harris: Prophecies and Destruction (Kindle) to get the book in seconds.
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