Russell Napier: Central Banks Have Become Irrelevant

[shiny!]

Interview with Russell Napier

The Scottish market strategist Russell Napier warns that investors should prepare for inflation rates of 4% and more by next year. The main reason: Governments have taken control of the money supply

https://themarket.ch/interview/russe...levant-ld.2323

[thriftyandboringinohio]

Re: Russell Napier: Central Banks Have Become Irrelevant

Interview with Russell Napier

The Scottish market strategist Russell Napier warns that investors should prepare for inflation rates of 4% and more by next year. The main reason: Governments have taken control of the money supply

https://themarket.ch/interview/russe...levant-ld.2323

Thanks shiny, great find.

[jk]

Re: Russell Napier: Central Banks Have Become Irrelevant

i think it will take longer than a year, perhaps 2 or 3. reasons: collapse of demand, especially as incomes drop with the end of ppp and the end of the $600/wk federal top-up of state unemployment. the congress is having a tough time even beginning to grapple with replacing/extending/changing benefits. the senate republicans can't agree among themselves, and their tentative offer of aboua $1trillion is a LONG way from the house's proposed $3trillion. meanwhile the unemployment top-up is ending next week [details of how the law is written, last covered day is july 25 or 26], so it is quite likely to lapse and disappear at least for some time before any replacement plan is put in place. this means incomes drop. there are approx 32 million unemployed, including those collecting state and/or federal unemployment benefits [the federal only plan is for self-employed and gig workers not covered by state plans]. this represents 20% of the labor force, so that's the unemployment rate, 20%.

the payouts, bailouts so far have just replaced missing incomes and done nothing to stimulate the economy. i'm saving money faster than i remember, because i have nothing to spend it on. i've cancelled 4 trips so far- hiking and visiting my kids and grandkids. those trips would have added up to thousands of dollars. but those dollars weren't spent. people can't spend on going to movies, going to restaurants, travel. they don't even need pants if they're working from home. my monthly gasoline expenditures have gone from about $175 to about $33. consumption is, or was, 70% of the economy.

come oct 1 united airlines will lay off 36,000 wokers, american will lay off 27,000. delta has already convinced 17,000 to take severance packages. how many newly bankrupt retailers can you name? let's see, there's j crew, lucky's markets, nieman marcus, pier 1, modell's sporting goods, jc penney, gnc,aeropostale and nautica, brooks brothers, ann taylor, lane bryant, and so on. how many restaurants will never come back?

the stock brokerages have all opened millions of accounts recently, as people are gambling [or i"nvesting"] in the stock market. no sports, no sports betting. they can't even spend the money they've got on a night at the movies, so they might as well "invest in the future." so what's happening to the money supply's velocity?

more money will have to be pumped into the economy in some manner that involves or promotes real spending on real goods and services. the perennial suggestion of infrastructure of course comes to mind, but we could also put better insulation into our housing stock, convert empty retail malls and office buildings into housing, and i'm sure find other useful ways to spend some extra money. those are the kinds of things that are going to have to happen before we get inflation in anything other than financial assets.

[seobook]

Re: Russell Napier: Central Banks Have Become Irrelevant

Aren't all those job losses also associated with the combination of supply shocks in some categories & web platform monopolies and other near monopolies gaining greater power over adjacent markets?

[jk]

Re: Russell Napier: Central Banks Have Become Irrelevant

Aren't all those job losses also associated with the combination of supply shocks in some categories & web platform monopolies and other near monopolies gaining greater power over adjacent markets?

yes, and that's part of why i think 2-3 yrs of deflation will segue to stagflation. supply chains WERE optimized for price, not resilience. shorten or change them and prices must go up. re-shore industries? prices go up. i think mexico will greatly benefit, but bottom line, when the crash in demand eventually bottoms and stabilizes, the changes and limits of supply will raise prices.