Repost from 5-17-2021
“It’s always been right to be sceptical when someone says ‘this is the year that inflation comes back’. But for the first time you can say this time is different. The pandemic might be the systemic earthquake that changes the inflation outlook we have been used to for the past 30 years.” – Jim Leaviss, M&G Investments
USAGOLD note: Are we approaching the summer of our discontent? This FT Big Read says the world has gone on an explosive borrowing binge, with the U.S. having “gone the furthest.” In short, we very well could be in for some unforeseen consequences in the investment realm. If that be the case, how well we prepared this spring could turn out to be crucial. Franklin Templeton’s chief investment officer Sonal Desai is quoted as saying: “There is an entire generation of traders who have grown up investing in the post-global financial crisis world of no inflation. People shouldn’t underestimate how uncertain things will look if we are entering a new paradigm.” This opinion piece will serve as a good starting point for those looking to dig a little deeper into the potential fallout from a new inflation-based paradigm. It does not diminish or gloss over the role being played by the free-spending Biden administration nudged along by a compliant Fed.