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Leading economist: High inflation is on the way


Ian Shepardson, a longtime Pantheon economist, predicts that inflation will rise sharply in the future, comparing high inflation over the past few decades.

to the the report CoinDesk, everything old is new again, and when it comes to inflation, it includes investor satisfaction. Ian Shepherdson, chief US economist at Pantheon Forecasting, believes that satisfaction stems from the slow pace of price increases in recent years.

He wrote in a report on Monday that the same thing happened in the early 1960s, just before the double-digit inflation that flooded into the 1970s.

The possible rise in inflation this time may be due to the $ 1.9 trillion stimulus package recently signed by US President Joe Biden, as well as the almost constant printing of money by the Federal Reserve.

Shepardson wrote in his report:

What we mean here is that the United States may now be on the verge of a major shift in inflation upward, with a starting point almost as low as it was in the 1960s, and expectations that are as deeply entrenched as they were then.

The current rate of consumer price increase, which is less than 2%, is not so worrying. But there are investors who are worried about buying Bitcoin (BTC) as a safeguard. [در برابر تورم] It is clear.

The senior economist warned, while not specifically naming Bitcoin:

Very few executives and traders today remember the last inflation shock of the bond portfolio, but that does not eliminate the possibility of another shock.

Shepardson describes what happened 60 years ago:

  • Inflation in the second half of the 1960s was the cost of the Vietnam War and the domestic cost of the socio-political program of then-President Lyndon B. Johnson, known as the “Great Society.” Subsequently, prices accelerated due to oil price shocks in the first half of the 1970s, as well as the US Federal Reserve’s weak monetary policy.
  • Consumer core inflation (CPI), which does not include food and energy, rose from 1.3 percent in 1965 to 3.5 percent in 1967 and then to 6.2 percent in 1970. This was a shock to investors who could not adjust their position to high inflation.
  • Then the same thing happened again, as nuclear inflation rose to new highs and peaked at 11.7 percent in February 1975.
  • By the time of the Third Inflation Surprise, in 1979-1980, investors had become much smarter. Nuclear inflation was even higher than in 1975, reaching 13.3 percent in May 1980, and the recession deepened.
  • [اما] This time, higher inflation could be a huge financial response to the Covid-19 pandemic. Although the inflation shock is not as frequent as it was in the 1960s, it may be too late.
  • Investors usually expect tomorrow to be like today; Hence the major changes [مانند تورم] They often seem insignificant for a long time.
  • We can not go back and the minds of the owners [اوراق قرضه خزانه‌داری] In 1964, but we are glad to assume that most of them had no idea what was going to happen.
  • Anyone who had this view and adjusted their investment portfolio to it was severely damaged by rising inflation over the next few years – in fact, some 20 or so years later.

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