Permanent Magic Number Hypothesis

Is there a charmed fiscal number that unlocks the inflationary promised-land? Central bank Economists have spent more than a decade in the West, two in Japan, desperately seeking the magic number QE. Though their own research is substantial and conclusive that LSAP’s like QE don’t work, and never have, officials conclude instead that it always comes up short because it wasn’t ever enough (or left alone long enough).

This isn’t really about consumer prices one way or the other. Inflation, rather, is the signal that economic health has been established and done so in a way that reflects a strong likelihood of being sustained.

Shoved aside by COVID overreactions, though central banks weren’t out of the game (QE’s did get massively upsized), over the last year they have been and continue to be overshadowed by fiscal authorities. Particularly in the US and Europe, monetary policy is so last decade. The twenties, at least their first year, these belong to government treasuries. That’s what they’re saying, anyway (stimulus-phoria). Read more…..


Chart of the Day

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While a lid has mostly been kept on inflation in the U.S., the CPI in the U.K. is creeping up, a sign that inflation is in play and that the country’s central bank might soon act on rates.

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