Inflation state of mind. Not really, but…
Luca Tobagi. Investment Strategist
The debate about inflation can be more or less intense, but it is always open. The COVID-19 pandemic may have brought some new elements to it.
Jeff Bezos, CEO and founder of Amazon.com, said: “There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second.”
To borrow a few social media terms, inflation is always a trending topic with a perennial hashtag. Its role in history and politics, in addition to its impact on our daily lives, means that inflation is an important topic in any conversation concerning the economy and financial markets.
I, and probably many of those who read this note, grew up and studied economics in a world where, if inflation was a problem, it was because it was too high. In recent years, however, a variety of forces have helped keep inflation low, including poorly regulated globalization, the Great Financial Crisis and the Great Recession that followed, and the decisive role of the feeble growth dynamics of broad money (as our Chief Economist John Greenwood rightly points out in several of his analyses). This has been useful because it has left central banks with free hands.
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