Global Economic Crisis

Sheldon Filger-blogger for GlobalEconomicCrisis.com

There is increasingly worrying data emerging from the largest developed economies, revealing rapidly rising levels of inflation. Despite the veil of silence being maintained by sovereigns, and the claims by central banks such as the U.S. Federal Reserve that inflationary spikes are but a temporary phenomenon, the data tells a different story.

Germany released a report  indicating that in  August, year to year inflation was 12.3 % versus  11.3 % in June. This shows that Germany being in double digit inflation territory is no flash in the pan, but a lasting and accelerating trend. This is also the highest rate of wholesale price inflation in the German economy since 1974

In the United Sates, housing prices year on year have risen by almost 20%. This is a staggering number, made more inexplicable in the wake of a still weak and Covid ravaged economy being propped up by both government deficit spending and Fed monetary loosening. And those policies lie at the heart of the problem.

Covid has afflicted global supply chains, leading to shortages of key commodities and industrial parts such as computer chips for automobile manufacturers. That in itself is a major driver of price inflation. However, central banks engaging in unprecedented money printing has , in effect, turbocharged inflation.  The artificially low mortgage rates  that have resulted from Fed policy decisions have not only provided new home buyers with easy credit; in the United States speculators and investors have been seizing the cheap money now available to buyers of homers  for purposes of flipping them for quick profits or, increasingly , converting them into rental properties.

As I have warned previously,  the indicators of stagflation-high inflation and low or negative economic growth- are increasing, pointing to a dismal long-term economic  future characterized by a severe recession or depression with high inflation in the near or medium term.