Loading ...With individual central banks having lost command over consumer price inflation, there has been gravitation to concerted global monetary stimulus. “If we all stimulate together, then we can spur a more systemic boost of inflation globally.” Such an approach is doomed to fail. There is today a strong inflationary bias in securities and asset prices. At the same time, the legacy from the historic Chinese and EM booms is unprecedented overcapacity throughout manufacturing. The disinflationary dynamic in many goods markets ensures that monetary stimulus will spur powerful flows to speculative Bubbles with muted impact on aggregate consumer price indices. Finance will flow in force to – and exacerbate – areas with strong inflationary biases (i.e. assets markets).
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