With central bankers desperate to boost inflation both in their country, and around the globe, yet failing to do so for years (especially as measured by the long end of the yield curve) leading to serious economists and pundits going so far as proposing the pinacle of monetary lunacy, such as helicopter money, one person may have stumbled upon the “magic formula” for how to create inflation in the new normal.
Here is One River Asset Management’s Eric Peters laying out his inflationary “revelation”:
‘British spenders have entirely looked through post-Brexit uncertainty,’ said Mark Carney. ‘Consumer jitters were notable by their absence,’ continued the Bank of England governor. UK wages kept growing, confidence remained solid, business investment resilient. So the Bank of England forecast its biggest inflation overshoot since 1997; expecting 2018 price gains to peak at 2.8%. Now, let’s assume that having misjudged every single economic consequence of Brexit, that the BOE miraculously gets this one inflation forecast right.
What’s it tell us?
A populist uprising, compromised free trade, immigration restrictions, a 15% currency devaluation, 0.50% interest rates combined with aggressive QE is today’s magic formula for modestly exceeding a 2% inflation target 2yrs hence.
This post was published at Zero Hedge on Nov 6, 2016.
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