THE CONTINENTAL ECONOMICS CURRENCY REVIEW
WORLD ECONOMIC OUTLOOK APRIL 2012
Conclusion
Most of the
trends that can be observed currently have been in place for some time and most
likely will continue so. The longer these trends of rising commodity prices
will continue, the more they become incompatible with rising bond and stock
prices. One of these two groups must give in. For the first group - gold, oil
and commodities - to crash, the emergence of a deflationary depression will be
required. This scenario cannot be fully excluded. For the second group - bonds
and stocks - to crash, an outbreak of inflation will do. Over the past decades,
and particularly in the past couple of years, monetary and fiscal policies of
the major economies of the world have provided all that is necessary for
hyperinflation to happen. Nevertheless, an outbreak of hyperinflation should not
be considered as a certainty. The world economy finds itself in the curious
situation that conditions for both, inflation and deflation, have been
prepared. The world economy resembles a boat on high sea that has been loaded
up with explosives. Either a spark will make the load explode before the boat
will sink or the boat will sink on its own and take all that’s on board down with
it to the ground.
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