The World Is Hurtling toward a Terrifying Hyperinflation
The comments below are an edited and abridged synopsis of an article by King World News
Alasdair Macleod says that money supply took off during Covid lockdowns, and it is about to take off again to pay everyone’s energy bills. But that is not all.
Demands for currency and credit to be conjured out of thin air to pay for everything will be coming thick and fast. Expectations that energy prices, including European electricity, have peaked are naïve. Putin has yet to fully put the screws on Europe and the world. It will be surprising if oil and natural gas prices in Europe are not significantly higher on a 12-month view. And Europe has messed up its electricity supplies—that is where the energy costs will rise most.
Bankers are trying to reduce their loan exposure to rising interest rates, undermining GDP. Besides paying for everyone’s energy bills, rescuing troubled banks, collapsing tax revenues and difficulties in selling government debt on rising yields, governments are expected to apply economic stimulus to support both their economies and financial markets.
Furthermore, there is evidence that the expansion of central bank credit has a far greater effect on prices than contracting bank credit. The replacement of commercial bank credit by central bank credit will have a far greater inflationary impact than the deflation from bank credit alone.
Attempts to rescue the American, European, and Japanese economies by replacing commercial bank credit with central bank credit will probably be the coup de grace for fiat.
We can anticipate the path to the destruction of purchasing power for all fiat currencies, not just those of Zimbabwe, Turkey, and Venezuela et al. A global hyperinflation is proving impossible to avoid.
Up for discussion: First it was Covid, now it is energy; yet more one-off inflation waves are to follow; the relative consequences of currency and credit inflation; and the consequences of fiat replacing a gold standard.