The World is Broken, Part 2 – Playing the Blame Game

There’s always a motive…

In “The World is Broken, Part 1,” a friend, who is no fan of European Central Bank President Christine Lagarde – agreed with a speech she gave that pretty much said the world is getting pulled apart.

But as he thought about it, after rethinking what he originally wrote, he wondered whether Lagarde didn’t have an ulterior motive...

I suspect the issue of de-globalization, for lack of a better term, will potentially be used as an excuse by central bankers to increase their inflation targets.?Maybe her speech was a crafty precursor to trying this.??

I am beginning to learn central bankers seem to like any excuse for more inflation.?I guess like taking more heroin, it always seems to be the easiest way out, until it isn’t, or you are dead, which might be one and the same thing.

As a refresher, in Part 1 my friend wrote that “globalization kept prices down so much, it led policy makers to (erroneously) try to create more inflation with loose money…..policy makers tried to create what wasn’t there.”

He has subsequently amended his thoughts to say...

The central bankers, for some reason unknown to me, tried to fight it by trying to create more inflation, for no real reason.?Not all lack of inflation is created equal.?A lack of inflation created by globalization did not need monetary stimulus.?It was a productive lack of inflation, which was not rate sensitive since rate lowering went into asset prices... not the productive economy.

Now that globalization is going the other way, causing inflationary pressure, he muses...

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