In the United States, inflation is accelerating, to its highest level since 1981, in fact the “Annual price increase reached 8.6% in May, an announcement that led to the fall of Wall Street and a rise in ten-year interest rates. A situation that puts Joe Biden in even more difficulty, five months before the midterm elections”.
The newspaper Le Monde d’ailleurs does not mince its words concerning this resounding return of inflation in the United States (although late and it’s easy once the bad news is there!)
“Unheard of since December 1981: annual inflation rose to 8.6% in May in the United States, according to figures published Friday, June 10 by the Ministry of Labor. This announcement led to an immediate fall on Wall Street (2.9% for the S&P 500 and 3.5% for the Nasdaq, an index rich in technology stocks) and a rise in ten-year interest rates, which went from 3.02% to more than 3.17%.
This figure confirms the failure of the Federal Reserve (Fed), chaired by Jerome Powell: with years of free money policy, the American central bank has allowed the inflation that we thought had disappeared to reappear. This general rise in prices is aggravating the difficulties of President Joe Biden, five months before the midterm elections. Consumer confidence, measured by the University of Michigan, collapsed in June, from 58.1 to 50.2%: this figure had never been reached, including during the great financial crisis of 2008. It is embodied in the price of a gallon of gasoline, which is now close to 5 dollars (1.25 euros per litre). »
And yes, inflation is equal to recession, because if wages are not indexed, then people’s purchasing power collapses, and if their purchasing power falls, then their confidence also collapses since they know that they will be less rich tomorrow than today.
And Le Monde dare to add that it’s not even Putin’s fault! That is to say if we move forward…
“The Russian invasion of Ukraine has reinforced a pressure on raw materials and energy that existed before. China’s lockdown due to the Covid-19 pandemic has disrupted value chains, but inflation is now affecting all sectors of the economy, fueled by ultra-loose fiscal and monetary policies during the health crisis. “Unpopular opinion: what causes inflation is not Putin, but too much money for too few goods”, summarizes on Twitter the financier Michael Gayed”.
There is obviously a monetary component to the inflation we are experiencing, but not exclusively.
There is also a strong component of scarcity of resources and production capacities.
It’s both monetary inflation but also shortage inflation, supply tension inflation and it’s much more serious because it will be much more durable, and it’s because analysts and economists don’t take not take into consideration this two-dimensional inflation that they thought and still think for many, that inflation will be unsustainable and that we should peak about now in the middle of 2022.
Nothing will happen.
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Source Le Monde.fr here