{"id":27673,"date":"2017-11-06T11:36:40","date_gmt":"2017-11-06T16:36:40","guid":{"rendered":"http:\/\/olduvai.ca\/?p=27673"},"modified":"2017-11-06T11:36:40","modified_gmt":"2017-11-06T16:36:40","slug":"the-big-reversal-inflation-and-higher-interest-rates-are-coming-our-way","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=27673","title":{"rendered":"The Big Reversal: Inflation and Higher Interest Rates Are Coming Our Way"},"content":{"rendered":"

The Big Reversal: Inflation and Higher Interest Rates Are Coming Our Way<\/a><\/h3>\n

This interaction will spark a runaway feedback loop that will smack asset valuations back to pre-bubble, pre-pyramid scheme levels.<\/i><\/p>\n

According to the conventional economic forecast, interest rates will stay near-zero essentially forever due to slow growth.<\/b> And since growth is slow, inflation will also remain neutral.<\/p>\n

This forecast is little more than an extension of the trends of the past 30+ years<\/b>: a secular decline in interest rates and official inflation, which remains around 2% or less. (As many of us have pointed out for years, the real rate of inflation is much higher–in the neighborhood of 7% annually for those exposed to real-world costs.)<\/p>\n

The Burrito Index: Consumer Prices Have Soared 160% Since 2001<\/a> (August 1, 2016)<\/p>\n

Inflation Isn’t Evenly Distributed: The Protected Are Fine, the Unprotected Are Impoverished Debt-Serfs<\/a> (May 25, 2017)<\/p>\n

About Those “Hedonic Adjustments” to Inflation: Ignoring the Systemic Decline in Quality, Utility, Durability and Service<\/a> (October 11, 2017)<\/p>\n

Be Careful What You Wish For: Inflation Is Much Higher Than Advertised<\/a> (October 5, 2017)<\/p>\n

Apparently unbeknownst to conventional economists, trends eventually reverse or give way to new trends.<\/b> As a general rule, whatever fundamentals are pushing the trend decay or slide into diminishing returns<\/i>, and new dynamics arise that power a new trend.<\/p>\n

I’ve often referred to the S-Curve as one model of how trends emerge, strengthen, top out, weaken and then fade. Trends often change suddenly, as in the phase-shift model, in which the status quo appears stable until hidden instabilities cause the entire “permanent and forever” status quo to collapse in a heap.<\/p>\n

The Bank for International Settlements (BIS) recently issued a report claiming that Demographics will reverse three multi-decade global trends<\/a><\/b>. Here’s a precis of the case for a globally aging populace and a shrinking workforce to reverse the downward trends in inflation and interest rates: New Study Says Aging Populations Will Drive Higher Interest Rates<\/a> (Bloomberg)<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

The Big Reversal: Inflation and Higher Interest Rates Are Coming Our Way This interaction will spark a runaway feedback loop that will smack asset valuations back to pre-bubble, pre-pyramid scheme levels. According to the conventional economic forecast, interest rates will stay near-zero essentially forever due to slow growth. And since growth is slow, inflation will […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1733,1269,127,2026,2889,426,587,812],"class_list":["post-27673","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-for-international-settlements","tag-bis","tag-charles-hugh-smith","tag-consumer-prices","tag-demographics","tag-inflation","tag-of-two-minds","tag-trends"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27673","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27673"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27673\/revisions"}],"predecessor-version":[{"id":27674,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27673\/revisions\/27674"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27673"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27673"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27673"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}