Markets taking this new COVID strain seriously.
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Everything Iāve seen and read about crypto currency just makes me think the whole thing is a giant con rigged by the same types of people who rig all the other markets in the world (ie. rich as fuck wankers who love scamming poorer people).
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Chinaās communist party reigning in the private sector. Letās see how that goes.
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Does that and the BOE raise signal the beginning of the downtrend in inflation, then?
That sort of decline in household debt might actually work to do the opposite, because that must be a lot of households coming to the end of paying off debt.
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My reading of the chart is it is not a measure of the repaying of debt but of funds available to make purchases. Here is a common definition of net lending: āNet lending can be derived as saving plus net receipts of capital transfers minus net purchases of non-financial assets (i.e. the balance of the capital account), or it can be measured as the difference between net acquisition of financial assets and net incurrence of liabilities.ā
The peak seen in that chart was government support for the economy during the pandemic, which put lots of money into the economy (if inefficiently distributed). Those borrowed or borrowable funds drove consumption both industrially and personally which resulted in the inflation we are now seeing. Borrowed funds typically are spent in the immediacy. As that peak runs off, we should see inflation cool also, unless governments step in to provide more stimulus. This, I think, partially explains why inflation in the U.K. is running around 4.2% but the government can borrow money for 30 years at 1.1%.
Wouldnāt there need to be a growth in the capital account for that to reduce inflationary pressures?
In that sense, ācapital accountā is a balance of payments term relating to international trade. Yes, a āsurplusā capital account might be disinflationary if it indicates a high savings rate. However, the above chartās commentary refers to āāhousehold savingā effect wearing off.ā I think this means those āsavedā funds have been burned off in purchases. Inflation, at its simplest, is an imbalance in supply and demand. That is the sort of inflation we see globally now. Governments juiced up demand, and supply has struggled to keep up. What happens when that extra juice runs off while supply has at least (potentially) added capacity, although I donāt think too much extra capacity has been added because available workers has constrained this.
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Yes, it is really hard to figure out how much of the inflation is structural, and how much of it is directly related to disruption. Clearly some of it is structural.
The other element that is very hard to get a handle on (perhaps less of a factor in the US) is the effects and significance of the shift in the consumption bundle away from services over the past year and a half.
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That hurt
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