Why I Worry About Inflation Globally

Money supply growth is high and inflation rising in much of the developing world. This is leading to inflation in China, Australia, and many other places, as the deflationary effects of adding new labor to the global capitalist labor pool gets outweighed by the hyperactive printing press.

Central banks are still adding to liquidity, perhaps to bail out banks who have made bad loans to parties on the wrong side of securities trades.  I like CLSA’s Greed and Fear, but don’t argue with what the central banks are doing, instead, try to analyze what they will do from here.

Two more notes: I don’t see China selling US Dollar assets.  It isn’t in their interest.  What they would more likely do is begin purchasing US corporations, and/or merely slowing/eliminating debt purchases — those would be more than uncomfortable enough.  Second, as I mentioned in my prior post, the risk is not US assets fleeing Asia, but Asian assets fleeing the US.

With that, have a good night.  I’ll try to get to my two other posts tomorrow.