Larry Fink is not just anyone, let me introduce him to you quickly. He is the CEO, the CEO as we say in English, the boss of BlackRock which is just the largest asset management company in the world with $ 9 trillion under management. Yes, you read that right. $ 9 trillion. BlackRock is one of the most powerful companies in the world. You may not listen to me, but if you don’t listen to Larry Fink, you are taking some small risks!
I’ll quickly translate this article from the ZeroHedge source site here.
Larry Fink: Inflation will be a “pretty big shock”
“According to all career economists, market strategists and Fed lackeys, inflation is transitory. The most important man on Wall Street disagrees ”.
Speaking at a virtual event hosted by Deutsche Bank, BlackRock CEO Larry Fink, who manages more money than the Fed (over $ 9 trillion at last check), countered the soothing speech that the surge in prices that is there will disappear tomorrow, and said that investors may underestimate the inflationary phenomenon.
“ Most people haven’t had a career of more than forty years, and they’ve only seen inflation go down over the past 30+ years. So it’s going to be a pretty big shock Fink said, sounding his warning.
Alas, unlike the Fed, Fink knows what he’s talking about: he started his career at First Boston Corp. in 1976, in full American inflation, the consumer price index reaching a peak of 14.8% in March 1980, and forcing Volcker to raise rates by up to 20%.
Fink added that central banks may have to reassess their policies if rising prices become a concern, but as even the shoe shiner now knows, the Fed’s mantra is that “inflation is transient” and so is the Fed. has absolutely no idea what to do if it loses control of inflation as the alternative is the biggest stock market crash in history.
Instead, to keep markets stable, the Fed has pledged to keep rates at zero for at least two years. If the Fed were to reconsider this, it would be incompatible with the massive fiscal stimulus triggered by the United States, Fink said. Joe Biden has proposed additional measures to stimulate the US economy, including a $ 1.7 trillion infrastructure spending plan. All of these stimulus measures require interest rates at their lowest.
“It would be quite strange to raise interest rates at the same time as we do this giant fiscal stimulus,” Fink said.
Then Fink addressed the inflationary aspects of the ecological transition.
“If our strategy is just to get a greener world, we’re going to have much higher inflation because we don’t have the technology to do all of that yet,” Fink said.
“It will also be a big political problem in the future: are we going to be prepared to accept more inflation if inflation is to accelerate our ecological footprint? “
To sum up, for the most powerful financier on the planet, inflation cannot be transitory because the Fed in particular and all the central banks in general cannot raise interest rates significantly. If they do they will trigger the biggest stock and bond crash of all time. If they don’t, then they will lose control of inflation, which will be anything but temporary.
There is no good solution.
But the most logical in analytical terms is that of inflation. This is why we must prepare for it. Those who want to know more can get the file below “Return of inflation, how not to be ruined”, by subscribing to the letter STRATEGIES here. I could also have called it “how not to get plucked”, because that is what it is and all those who analyze the situation a little have already understood what was going to happen.
It is already too late, but all is not lost.
Prepare yourselves !