Removing The Punchbowls

Published on: November 29th, 2021

Inflationary pressures continue to rise. The peak will be higher than many expect. The ensuing trough will be higher too. As the Central Banks become pro-cyclical, inflation and growth will begin to oscillate more like the 1960s and 1970s than Greenspan’s Great Moderation. This is a recipe for volatility. 2022 will not be a year for the faint-hearted…

Comments

  • OM
    Oliver M.
    29 November 2021 @ 19:12
    2 0
    Sounds like it's a good time to take that 1 year long trip around the world I've been dreaming of...
  • AT
    Aleem T.
    30 November 2021 @ 13:15
    1 0
    interesting that there is such a divergence on R and J's views on Growth and Inflation/Deflation. Wonder how the Innovation stocks that R likes play out if J is correct
    • JM
      Jake M.
      1 December 2021 @ 07:17
      1 0
      what's interesting is that if I just look at TLT (long duration government bond), the market is suggesting not much inflation. quite strange.
  • JH
    Jonathon H.
    5 December 2021 @ 11:03
    1 0
    Great piece thanks Julian. The inflation/price oscillation is a lovely analogy. Another physics one that might be useful is the double pendulum system; at small deviations/low energy it is entirely predictable using Newtonian mechanics. However, once it gains enough energy to cross a critical chaotic threshold (not able to be predicted by current mathematics) and the system becomes truly chaotic and unpredictable. What you describe above fits this situation beautifully. Going to be an interesting year, cheers
  • JK
    James K.
    13 December 2021 @ 15:10
    0 0
    The main hole in this piece IMO is when you ask "What makes people think that they can't pay higher prices?" The bifurcation of outcomes. The bottom half of the US will struggle as they are loosing ground in real terms. I see this as demand destruction from those with the highest propensity to spend. Would love to hear your thoughts.