Jack Dorsey believes that hyperinflation [with rates of upto 13,000 per cent per year] is coming to America and thus to the world. The reason for this event is that the money supply, or M2 money, is being increased by a combination of the Federal Reserve electronically printing $US and the current Fiscal Spending spree in Washington DC. The combined impact of those two events has already pushed inflation into global markets.
Cathie Wood believes that the decreasing velocity of M2 money is putting a brake on the inflationary cycle as happened in 2008 [against her predictions at that time]. She also points to the imbalance between supply and demand [which is causing cost-push inflation at present] which will see a correction over the holiday season as consumers spend much less than usual or as expected. This "consumer underspend" will leave businesses with an "inventory overhang" and this will lead markets to begin to unwind the price to supply-chain pressures on inflation.
For me... The most interesting elements of the Dorsey versus Wood dialogue is that Jack is investing in Bitcoin [his hedge against the decline of fiat currencies] and Cathie is investing in companies that will boost global productivity. The blockchain technologies form the current base for Bitcoin while inventions [happening in many different fields] helps to form a foundation for generational breakthroughs in productivity.
It could be that both Jack and Cathie are right in their predictions for the global economy. Indeed this could prove to be the best possible outcome for all of us [the average punters] as these inflationary and deflationary impacts tend to cancel each other out.
What do you think is going to happen inside the global economy in 2022 and thereafter?
Richard.
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