Get Ready for Inflation Mega-trend to Surge 2021

By: Nadeem_Walayat

So the US looks set to approve stimulus spending of $1,9 trillion for the US economy during 2021, with economists singing it's praises of how basically you get a free lunch, one of huge deficit spending at zero interest rate and no inflation. Understand $1.9 trillion is 10% of the US Economy! This for an economy that has already recovered from the covid depression and was destined to grow by about 3% in 2021. So what happens when one throws 10% of GDP at an economy that is growing by 3% per annum. No you don't get GDP growth of 13% per annum, yes it will boost US GDP for 2021 but not by 10%, perhaps by another 3%, so where does the other 7% or $1.5 trillion go? Into HIGHER PRICES, INFLATION! Some of which may be reflected in the official inflation indices.

$1.9 trillion will INFLATE ASSET, COMMODITY AND CONSUMER PRICES. With similar deficit spending sprees taking place in many nations which means to expect a surge in global inflation. The bond markets despite Fed massaging of the yield curve is already starting to discount future inflation with the yield on 10 year bonds rising from 0.5% to 1.5% over the past few months.

So folks contrary to the fools that populate the mainstream financial press, I once more iterate to prepare yourselves for HIGH INFLATION, how high is very difficult to say, but I am sure with the benefit of hindsight a year from now many will be looking in their rear view mirror to explain why inflation had soared to well above all expectations,

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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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