Stocks, houses, commodities, Bitcoin – the price of nearly everything is up double digits vs last years pre-coronavirus highs.
Have the trillions in stimulus ushered in a new bull market in, well, everything? Or have they helped blow the biggest asset price bubble in history?
Macro analyst Wolf Richter suspects the latter. And he doesn’t think we have much time left before it bursts.
In an interview with our friend Adam Taggart, Wolf concludes we’re seeing a mania that will likely pop in the same manner as all that have preceded it, he has another reason for expecting lower asset prices ahead.
We are clearly heading down the path towards much higher inflation. And in Wolf’s eyes, that will eventually force the Federal Reserve to start tightening at this point — something that seems unimaginable to many today’s market participants, who have come to see the Fed’s 10+ years of easing as an eternal constant.
But regardless of whatever laughably low number is reported by the government’s CPI (the usefulness of which was thoroughly debunked in our recent interview on the Chapwood Index), inflation and its impact on prices is starting to run rampant.
You’d have to be blind not to see it looking at the housing market.
Wolf reminds us that inflation is bad for banks and ultimately bad for the fortunes of the top 1% (the twin powers running the current system), and once they start feeling enough pain, they will apply tremendous political pressure for the Fed to tighten — something he sees could potentially happen within the next year.
And that, along with the accompanying higher interest rates, would wreak havoc with today’s highly-stretched valuation multiples, over-leveraged zombie corporations, and the ballooning federal debt.
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