One week ago, we showed a quick and simple primer by Bank of America explaining why the pervasive global deflationary wave (in the monetary sense, not in the soaring rent and unprecedented tuition and drug costs – remember, those are simply hedonically adjusted away by the CPI to where they cease to exist) blanketing the world can be explained by the three Ds: debt, demographics and disruption.
This is what BofA said:
Disruption: Technological innovation and disruption are driving many goods & service sector prices lower (rent & health care are two important exceptions); extending human life and the propensity to save; fostering wage and job insecurity. Demographics: The size of the working population of the developed world peaked in 2011 and will fall from 833 million to 799 million by 2025, putting downward pressure on potential growth and inflation (Chart 3). And by 2050, the world’s ‘Silver Generation’ will increase by 885 million people, many of whom will save more in anticipation of old age. Debt: Minimal deleveraging since the GFC and a large debt overhang remain impediments to nominal growth; global debt as a % of GDP actually rose from 162% in 2001 to 211% in 2013, an all-time high.
This post was published at Zero Hedge on 10/19/2015.
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