Robert Lloyd, CFA
Inflation is going to be a lot more sticky this cycle
Updated: Nov 14, 2022
Even though we think inflation will fall as we progress through the current recession, there are powerful inflation pressures in place that may prevent a return to the low-inflation era of the 2010s.
Baby boomers are retiring and adult participation in the workforce is continuing its multi-decade decline. Companies are scrambling to find workers and unlike previous recessions, workers are being retained (for now).
Governments have enormous levels of debt and must find a way to deal with it. Economists say there are 3 ways to deal with debt: 1) pay it off, 2) default, and 3) inflate it away if you are a government. Here is a 2011 paper advocating inflating away government debt: The Liquidation of Government Debt (http://ow.ly/6oc850LuRcL).
Tensions with Russia and China are disrupting very long supply chains that the world has come to depend on over the last 20 or 30 years. Whether it be Ukranian food going to African countries or Chinese goods sold all over world, interruptions in the normal trade of goods will make everything more expensive. S
• Deficit Spending
Global governments have spent lavishly during the pandemic, just as they have over recent decades. Low-cost debt has encouraged borrowing, injecting large amounts of cash into the global economy. So far, the response of many governments to the current inflation is to find ways to provide more growth so people can pay the bills.
If you'd like to discuss how to manage through this environment, please reach out to us: email@example.com.
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
Lloyds Intrepid LLC is doing business as Lloyds Intrepid Wealth Management. Lloyds Intrepid LLC offers investment advisory services in the State of Texas where registered and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Lloyds Intrepid LLC and its advisers do not provide legal, tax or accounting advice. Lloyds Intrepid LLC formulates retirement plans, investment strategies, portfolio construction and investment due diligence for clients with signed investment advisory agreements with us. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. All opinions and outlooks are subject to change.
© 2022 Lloyds Intrepid LLC