Death of Inflation and the Death of Equities?

Is Inflation Dead? – Bloomberg Business Week

Inflation Is Here and Coming

From a contrarian perspective, the front page of Bloomberg Business Week this week is a classic contrarian sign that we may be on the verge of a serious bout of inflation or indeed stagflation as the global economy slows sharply and currencies are devalued again.

The online version of article, ‘Did Capitalism Kill Inflation?’  is well worth a read.

It ignores the fact that there has been massive increase in debt, inflation in asset markets and in particular in property markets – both to rent and to buy residential and commercial property.

It exonerates central bankers from creating very significant inflation in apartments, houses and property markets – the most important cost to most individuals, families and companies in the western world.

It ignores and exonerates central bankers for reigniting and recreating many property bubbles, stock market bubbles and other asset bubbles in the ‘Everything Bubble’ of 2019. 

Instead, evil “capitalism” and “globalisation” is again blamed for all economic ills. Ignoring the fact that there is no capitalism today, rather we have a ugly mongrel form of crony globalisation and corrupt capitalism or corporatism which continually puts the interests of elites, corporations and banks over the interests of families, small businesses and society. 

The front page brings to mind the classic Business Week front page in August 1979 entitled ‘The Death of Equities’ which we considered in our recent video update looking at where we are at in the market cycle.

‘The Death of Equities’ front page and article showed how mass psychology was very negative towards stocks after a long bear market. But in fact, stocks were in the process of bottoming and the article heralded, within a few short months, a bull market in U.S. shares which saw massive gains over the next 20 years (with some significant blips in 1987 and 1998 along the way).

The article is very complacent about inflation and terms inflation a “bogey man.” The huge complacency about the risk of inflation today is a classic contrarian signal and strongly suggests that inflation, stagflation (and in a worst case scenario hyperinflation) will rear its ugly head in the coming months.

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