Divergence
- The Fed plans to hike 6 times in two years.
- The Bank of England took a baby step hike.
- The ECB may not hike for years.
“It’s a raging inflation inferno right now” says Chris.” We may not see positive real rates again in our lives”.
We also discuss demographics, housing, and flaws in the measurement of inflation.
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Mish
The Fed’s central worry is not to
upset the markets is very true. We are in a MMT world in the US, the EU and
China which includes 75% of the world. I don’t like MMT in general but I can
live with MMT light because we don’t have much choice for the moment with the
Covid effects .A Gold Standard worked in a 19th Century setting but
probably won’t now. Perhaps cryptos are the answer but for that I can’t say but
it is an alternative maybe. For the ECB
no one expects them to raise rates substantially because if they do the EU
breaks apart. What Mish said about us following Japan where asset prices
gradually wasting down to reasonable levels is what the Central Banks are hoping
for, a gradual decline that hurts the least amount and of course I would like
that too but unfortunately for that you need a stable international situation which
Japan had but we probably won’t have. For the EU vs the US just compare the
S&P 500 to the MSCI EUROPE (MSCI) and guess who will come up on top.
“For Dimitri Vergne, a sustainability policy officer at the European Consumer Organisation (BEUC), the energy crunch doesn’t undermine the EU’s green push but actually reinforces its whole point.
“It’s a clear call for us to accelerate the shift to a more renewables-based energy system. It’s actually our dependence on fossil fuels, like petrol and natural gas, which makes our energy bills much more expensive,” he told Euronews.”
I have the cash to buy three rentals in 2022. Been looking for 6 months, nothing.
Thanks Mish, very interesting. It all depends on inflation now, if it continues it will be very difficult to tame it. They won’t be able to hike enough to stop it because that hurts the general public as well as the actual price rises. The public are going to blame the politicians leading up to elections.The UKs small 0.15% hike is said to add £15 per month to the average mortgage. This on top of the increased energy costs, increased food prices etc. In addition, from April a National Insurance increase of 1.25% for individuals and businesses which was announce last September kicks in. All of which adds to pressure for higher wage demands.Maybe some of this will take the heat out of inflation, but if it doesn’t the hole the central banks have dug themselves will keep on growing.
“Gas and electricity bills for millions of Britons could soar to a record £2,000-a-year from next year as the energy price cap is set to be doubled in the coming months, households have been warned.
Households could face a 56 per cent rise in their energy bills from April after unprecedented wholesale costs force Ofgem to lift the price cap.
Investment bank Investec has said that Britain’s energy price cap will have to be lifted to £1,995-a-year per household from April when the regulator next alters the limit, reported the https://www.ft.com/content/17b2f2a5-3f84-4bd5-90da-3a29af25bdd7. “
The Fed might do one or two baby step hikes.
Even the BOE might do one more.
Then the entire leveraged Ponzi scheme falls apart everywhere.