An unfortunate aspect of the human condition is our ability to be surprised by events that, with hindsight, were obvious. Latest being the resurgence of inflation after four decades of dormancy.
The graph above from Stanlib chief economist Kevin Lings illustrates the point better than those proverbial thousand words. An article in the Wall Street Journal this morning supports this “inflation surging” thesis. Inflation in the US is back at levels last seen in the early 1980s. Where America goes, the world follows.
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Looking back, it’s predictable. What Central Banks call “quantitative easing” is actually the creation of money out of thin air. And they’ve been at this highly inflationary practice since 2008. When you supply more of anything, including money, it will eventually lose relative value. No exceptions. Inflation bails out spendthrift governments, but punishes those living off fixed incomes and hurts economic growth.
Crypto currencies have replaced gold as the preferred inflation hedge. Bitcoin’s price is up from R450,000 to R850,000 in the last three month. House prices in the West have been rocketing, with sales often conducted above asking prices. Inflation’s alarm bells are ringing. Loudly.
More for you today (click on linked headline to access) –Â
*Â The late Allan Greenblo has justifiably received plaudits for contributions to his homeland. His biggest disappointment, however, came a quarter century back when an SA judge banned his meticulously researched book on hotelier Sol Kerzner. Before his passing a week ago, Greenblo was working on getting that book published. We may see it soon. Have a read, click here.
* Jim Chanos: China’s ‘Leveraged Prosperity’ model is doomed, And that’s not the worst. The founder of Kynikos Associates, described as the world’s best known short-seller, is doubling down on his bearish Chinese position.
*Â LinkedIn social network is leaving China, but Microsoft remains. An article from the WSJ which relates to the subject of the FT’s hard-hitting editorial below. Chinese ties are an expanding dilemma, especially for media companies, among them Naspers, which owns News24 and is Tencent’s biggest shareholder.
* PS If you missed the best of BizNews last week, here’s the weekend’s Digest, our clickable electronic newspaper. You can download it here.
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