Taps Coogan – December 2nd, 2020
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The following chart, from the Financial Times, shows the market implied inflation rate over the next ten years based on the difference between the 10-year treasury yield and the 10-year TIPS.
Amid the ongoing debate as to whether the whirlwind events of 2020 will prove to be inflationary or deflationary, it looks as though the market’s implied expectations are moving into the inflation camp.
If that proves to be the case (a big if…), we can start to imagine who the bag-holders for the capital misallocation debt-palooza of the past decade are: bond holders who lent money for next to nothing while central banks were promising to do whatever to takes to create negative real rates. Whatever happened to don’t fight the Fed?
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Been trying to comment but spell check deletes all the text. Inflation is out of control unless you are talking wages. A friend just changed jobs after 24 years……so he revealed his salary and he is now going to make $1 an hour less than I did at 26….accounting for “inflation” using bogus government calculations
I really need to find a better term than “inflation” to differentiate between financial market inflation metrics and real inflation because I am tired of writing in the caveat that ‘real world inflation for average people is higher than official metrics’ in every article. How about “official inflation” vs “real inflation”? Any ideas?
LOL…..I hear ya taps. I too am sick of arguing in these “where’s the inflation” or “the coming inflation” articles about how what is happening in real life doesn’t square with what i’m reading. How does this all end? THAT is the question that the person I mentioned in my post AND everyone else I talk with keep wondering.
I have no idea what term to use……all I know is, i’m at the end of my rope.
Inflation is often led by expectations and perceptions. While hyperinflation does not often occur, when it hits, and the speed at which it can hit is a massive game changer that can make bonds and many other investments nearly worthless. More on this subject in the article below.
https://brucewilds.blogspot.com/2019/03/hyperinflation-seldom-occurs-but-can.html
Fixed the link for ya
Been reading “Advancing Time” for a while now, have you bookmarked…….keep up the good work.