In recent days, rates have been tightening in the United States.
I have already told you a little about it.
We are still relatively far from the pain threshold and market squeals causing a crash, but we are getting closer.
Why this increase in market rates?
The American economic authorities, namely the new president Joe Biden and the governor of the FED are not even afraid of inflation.
In fact, they believe in giving money, even more money, directly to people in the form of a check. Moreover, a new plan of 1,900 billion dollars will soon be poured out on the jubilant crowd.
Biden and Fed Drop 1970s Inflation Fears!
In the 70s and 80s, which does not make us any younger, we had a real inflation problem, an inflation that it had been decided to definitively break by two means.
The first was a sharp increase in interest rates.
The second was the deindexation of wages which no longer rose automatically according to the inflation rate of the previous year.
This policy worked all over the western world and inflation was beaten.
Since that time we have lived on the idea that inflation is very, very nasty and that central banks must ensure price stability, as is particularly the case for the ECB.
We are in the process of changing the paradigm and assumption on inflation.
This is exactly what this New York Times article says.
WASHINGTON – “Presidents who find themselves pulling the country out of recessions have long listened to warnings from inflation-obsessed economists who fear that acting aggressively to stimulate a struggling economy will bring back the monstrous price hikes that have hit the country in the 1970s.
As President Biden continues to push for a $ 1.9 trillion stimulus package, he and his top economic advisers are dismissing these warnings, as is the Federal Reserve led by President Jerome H. Powell.
After years of terrible inflation expectations that never materialized, fiscal and monetary policy makers in Washington decided that the risk of the economy “overheating” was far less than the risk of not warming it enough. .
“No limit” mode engaged!
What you have just read in the columns of the New York Times implies that the “no limit” mode in terms of injections of money has just been activated in the United States.
We’re going to relaunch.
With counterfeit bills if necessary.
In reality we will be forced to recreate inflation to reduce the stock of debt.
There is no salvation without inflation if not the sad specter of bankruptcy and insolvency.
This means that you have to buy assets, ideally on credit because prices will go up.
Inflation is coming.
And that does not reassure the markets.
At the moment they are trembling.
Maybe tomorrow they will catch cold. For that, they must understand what is going to happen, and it is possible that the markets do not panic that much when they understand … which I will explain in my next strategy letter to my valued subscribers, devoted to new real estate in the introduction, precisely on the specific form of inflation that awaits us.
It is already too late, but all is not lost. Prepare yourselves !