21 August 2020

This economy can’t run hot enough to generate inflation of more than 2%.

An Inflationary Boom or a Deflationary Bust?

This equity market continues to confound the sceptics: since its pandemic lows, there’s been no retest of its initial lows, the S&P500 has barely experienced any serious drawbacks, while it’s now back at its all-time highs (with tech notably above its prior highs). Equally on the economic front, the strength of the bounce in much of the data has surprised many observers, and likely speaks to the size of the stimulus response by policy makers across the globe.

What’s Next? Where’s the Risk?

Click here to watch what Chris Watling have to say.

“Tight money and reduced availability of credit are usually at the centre of ‘demand shock’ recessions.”

To date,  US policy makers (in conjunction with other global policy makers) have demonstrated the effectiveness of large, swiftly enacted, and broad ranging, stimulus programs.
With that, recent economic momentum has been impressive. To maintain that momentum, however, it’s necessary to ensure that access to liquidity and credit remains good for all key constituent parts of the US economy.

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