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TSI Opinion: Is there a narrative shift in inflation expectations in the media?

With news agencies bombarding us with a continuous stream of emergencies, consumers of information often have a difficult time discerning which ones need their immediate attention, leaving some narratives left veiled in the background.

One of those which has been put on the back burner is the story of money creation to counteract the current deflationary environment caused by the global health crisis. Governments around the world have turned on the printing presses, and have created trillions upon trillions of currency units out of thin air. This is called deficit spending. While spending money the government doesn’t have is nothing new for politicians, what is different this time, is the sheer scale.

Legislators around the world have excused their acceleration of deficit spending as being necessary in order to save the global economy, and considering the economic devastation wrought by the lock-downs, few would disagree. However, there is a growing possibility that the money creation that “saves” (we’ll keep this in the present tense) the global economy, will also be its undoing.

We have noticed that a number of institutions in the media and finance have shifted their narratives toward expectations of dramatically increased inflation. Buried in the background of many mainstream news websites have been the opinion and commentary of analysts from J.P. Morgan, Morgan Stanley and news magazines like the Economist clearly predicting higher consumer prices in the future, an effect of inflation or currency creation. We thought it would be instructive to share some of the links for these stories together for our audience to get a more complete picture of the changing narrative in the press. When seen collectively, we can’t say we weren’t warned about what’s ahead.

See below:

https://www.institutionalinvestor.com/article/b1ld0bhs5gzs9s/Inflation-Never-Materialized-After-the-Last-Crisis-JPMorgan-Thinks-This-Time-Is-Different

https://www.express.co.uk/finance/city/1275488/coronavirus-news-inflation-deflation-prices-oil-spt

https://www.economist.com/finance-and-economics/2020/04/18/covid-19-could-lead-to-the-return-of-inflation-eventually

https://www.bloomberg.com/news/articles/2020-05-11/virus-crisis-augurs-an-inflation-breakout-morgan-stanley-says

https://www.wsj.com/articles/get-ready-for-the-return-of-inflation-11587659836

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