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 Deutsche Bank warns about rising inflation:

11.06.21. It’s an everyday event that either the State or Federal Government doles out free cash to a populace that now preforms like trained seals at the ballot box.
Sometimes it makes sense, other times one has to shrug one’s shoulders and wonder why.
Most Saturday nights the TV goes on how that day’s house auctions broke records in terms of what people pay.
Prices go up in pubs and restaurants. In the coffee shop the other day someone had bacon and eggs and it cost $32!!
We are borrowing and spending money like it’s going out of style but it has to be paid back. Well the warnings are coming in and Leah Barkoukis discusses the latest warning from Germany’s largest bank:

Deutsche Bank said the U.S. may be headed toward one of its worst periods of inflation in history amid increased government spending and relaxed monetary policy, warning that the belief inflation is transitory could have serious consequences for the economy.
The report, which was released Monday, begins with a series of quotes—contrasting Ronald Reagan’s warning about how serious inflation is with how Joe Biden, Janet Yellen and others have justified “acting big.”
“Despite the shift in priorities, central bankers must still prioritize inflation,” the report says. “Indeed, history has shown that the social costs of significantly higher inflation and greatly expanded debt servicing obligations make it hard, if not impossible to reach the social goals that the new US administration (among others) is keen to achieve. We fear that the vulnerable and disadvantaged will be hit first and hardest by mistakes in policy.”
Deutsche took particular issue with the Federal Reserve’s new framework tolerating higher inflation in order to reach a full recovery.
“The consequence of delay will be greater disruption of economic and financial activity than would be otherwise be the case when the Fed does finally act,” Deutsche noted. “In turn, this could create a significant recession and set off a chain of financial distress around the world, particularly in emerging markets.”
The bank also took an opposing view to the belief that the rise in inflation will be temporary.
“We are witnessing the most important shift in global macro policy since the Reagan/Volcker axis 40 years ago. Fiscal injections are now ‘off the charts’ at the same time as the Fed’s modus operandi has shifted to tolerate higher inflation. Never before have we seen such coordinated expansionary fiscal and monetary policy. This will continue as output moves above potential. This is why this time is different for inflation,” the report said. “The effects could be devastating, particularly for the most vulnerable in society.”
In conclusion, the bank said the Fed’s approach to inflation “leaves global economies sitting on a time bomb.”
We worry that inflation will make a comeback. Few still remember how our societies and economies were threatened by high inflation 50 years ago. The most basic laws of economics, the ones that have stood the test of time over a millennium, have not been suspended. An explosive growth in debt financed largely by central banks is likely to lead to higher inflation. We worry that the painful lessons of an inflationary past are being ignored by central bankers, either because they really believe that this time is different, or they have bought into a new paradigm that low interest rates are here to stay, or they are protecting their institutions by not trying to hold back a political steam roller. Whatever the reason, we expect inflationary pressures to re-emerge as the Fed continues with its policy of patience and its stated belief that current pressures are largely transitory. It may take a year longer until 2023 but inflation will re-emerge. And while it is admirable that this patience is due to the fact that the Fed’s priorities are shifting towards social goals, neglecting inflation leaves global economies sitting on a time bomb. (Deutsche Bank)
In time, social priorities will pushed to the back burner if “inflation returns in earnest” and central banks are forced to act, making policy changes that “will only make it harder for policymakers to achieve the social goals that our societies need.”

{ 6 comments… add one }
  • Muphin 11/06/2021, 4:45 am

    Harry Dent, Harry predicted in 2006 that there would be a financial collapse in the near future, there was in 2007/8 (GFC).

    Harry is now predicting that another GFC is going to happen very shortly. Probably through inflation or the lack of trust in the US-dollar (Biden policies) and don’t forget the housing market. House sales in the US have fallen 14 percent since Biden cheated his way into the Presidency.

    Russia and China have started dumping the US-dollar in favour of gold and the Euro. Britain and some other countries are buying gold in large amounts.

  • John 11/06/2021, 7:59 am

    You could argue Russia and China dumping the dollar and buying gold are doing their best to destabilise the US dollar not just covering their backsides. But if inflation and interest rates start rising you can imagine the effect on the million dollar mortgages of houses in Sydney in particular. Massive foreclosures as repayments fail, forced sales and subsequently housing prices drop and people are left with nothing but a mortgage. Things could get ugly.

  • Ian_A 11/06/2021, 9:13 am

    Biden’s people are toying with Magic Pudding Economics, called Modern Monetary Theory, where the idea is to just spend as much as you like, then print the money to cover it. Of course ratbags like AOC are all for it. Recipe for an Argentinian or Venezualian situation with runaway inflation running at 100s percent daily.

    Besides that, there’s all sorts of industrial supply chain problems going on at the moment, due to China’s release of their engineered virus. Demand exceeding supply should see inflation kick off.

  • jaded 11/06/2021, 9:33 am

    Isn’t this the whole point of the New World Order, Build Back Better. Remember you won’t own anything. John’s comment above on mortgages is exactly what it is all about. Read the clap trap coming out of the G7. Where we have to do capitalism differently. In other words the wealth has to be re distributed including investment which would effect superannuation, pension funds, banking. All of this is being done under the guise of decarbonizing the world.

  • Graham+Richards 11/06/2021, 10:56 am

    Now we have another name change!,,

    First it was Global Warming which nobody believed & indeed was proven as even the UN admitted temperatures has remained stable.
    Quickly, change the label to Climate Change .still nobody believes it.
    Quick change it to Climate
    Emergency. This is generally known as putting lipstick on the pig. It’s still pretty ugly & everyone knows the lipstick makes no difference.

    Also wondering when Each Way Albo’s Labor Party will think that’s a catchy phrase & start using it. They’ll probably apply for copyright.

    The Latest lie is Transitory Inflation. WTF. What is it transitioning to, a female. With or without lipstick??

    A President Joe Fraud with lipstick?
    Inflation only transitions into bad news for all, country wallowing in rising poverty.
    Transitory Inflation, pigs flying while knitting pink socks!!

    • Bwana Neusi 11/06/2021, 12:10 pm

      But wait G+R There are still a couple of gears left in the climate gearbox.
      “Climate Catastrophe” anyone, or how about “Climate Armageddon” or even “Climate Cataclysm”

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