Tuesday, August 7, 2012
Warner looks forward to an inflationary endgame
"The Bank of England wonâ€™t admit that it is targeting nominal GDP growth, but this is in essence whatâ€™s going on. Growth which is predominately or wholly made up of inflation seems preferable to no growth at all. Eventually, the Bank will need to go rapidly into reverse to prevent more serious inflation, a la 1970s. The velocity of money will rise, and all that freshly minted cash will suddenly start chasing goods, wages, assets and commodities, instead of sitting in bonds. Unfortunately, that point still looks some distance off." This scenario appears to be years away yet. If and when it happens, that'll be game over for HPC.