社区

Last decade since 2008 GFC, during the QE initiated by Fed to prevent the world from imploding from all the MBS as the music stopped, the feared inflation from all that "money pumping" did not happen. 

Why is this so? Money velocity or its annual turnover rate slowed. It is when it takes off that the inflationary drive kicks in. This velocity is still declining.  

Are we now in a different era where inflation will now take off like a rocket? Or is this inflation just transitory?  

I believe Cathie Wood is right on point for this and that Jack Dorsey (Twitter's and Square's CEO) is off for his point on hyperinflation. 

QE will not trigger hyperinflation because of two reasons - low velocity of money and ultra-high debt levels. Right now, Fed is just lending money to the USG to spend, and the USG must of course, repay. Hence whenever the deadline to raise debt ceiling reaches, jitters happen in the market because while USG has not defaulted on its debt, and has never failed to come through on this front, sometimes the internal squabbles can be a little... dicey.  

Deflation in fact, is going to take place over the next few years. Right now, the research points to the rapidly declining AI training costs, which are declining at 40%-70% annually. This is transformational as AI applications seep into every other industry. Just take a look at device costs that contain some form of software running at the backend - they are getting much cheaper. 

If enterprises and individuals like us alike believe that prices will fall in the near future, we will delay our purchases. Since i'm holding a Galaxy Fold 2, the Fold 3 improvements are merely incremental. 

However, Fold 3 is already about 23% cheaper than Fold 2 for similar specs (256Gb model) with some improvements! Even the 512Gb model is $500 cheaper than the Fold 2's 256 Gb capacity.  

Another cyclical issue is working towards the deflation narrative. That would be the bullwhip effect causing distortion in supply chain. Right now there is a crazy stocking up because the supply chain is jammed up. 

For eg, Just look at the retail outlets just stocking up on toys for the year end purchases. By the time 25 Dec hits, the prices on these toys will go down. Commodity prices like oil and lumber are also down by about half from the peak. 

On oil, its own seeds of destruction have been sown. The use of electric vehicles which have greater efficiency in translating stored energy into kinetic energy are already in motion and this will play out within the next decade. So if you have shares in companies like Shell, ExxonMobil, etc., you may need to rethink allocation. Countries that have invested heavily in the petrochemical industry, jobs created for that part of the industry involving petroleum refining, etc. will need to be relooked at seriously. Those guys are likely going to face employment issues within the next few years.