Transitory Inflation Sparks the Fears of Economic Slowdown

The Federal Reserve left interest rate and monetery policy unchanged. This indicates that the US is incomplete economic recovery until now.

Some economic experts believe that Federal Reserve will be wrong on inflation being temporary. From my point of view, it is quite difficult to predict inflation at this moment. Fears about the highly contagious Delta variant of Covid-19 leading to another round of economic slowdown. However, rising infection cases will cause more supply chain interruptions leading to more inflation. 

Meanwhile, some leading companies expressed that they are passing rising costs along to consumers which point out that some inflation will stick around.

As there are industry raw material inflation and higher transportation costs, implementing additional prices increases become necessary.

Another concern is that it is stagflation instead of transitory inflation. That toxic combination of slowing growth and rising prices is a real risk and a dangerous signal of stagflation.

Theoretically, stagflation will trigger bullish markets for commodity and bullions. If there is rising inflation, investors will look at hard assets including bullion markets, like Gold, Silver, Platinum.

Do you believe that bullions prices are starting to rise again?

Let me know your thought.

1 oz gold Canadian Maple Leaf Coin

Is stagflation coming?

“Property market is going bananas around the world.” He says after his morning coffee.

It’s always his show time in the morning at his office.

“How come the housing demand is still strong during the pandemic. Property market should start to cool on its own when unemployment rates is going up and ecomony is hit by lockdowns.” I complain.

“It can be a good sign of ecomony is covering or a sign of something bad.” He said

“bad thing? What would that be?” I doubt

“The thing that every government dosen’t want to see it.” he contiues.

“Stagflation.” He states.

I wait for his explanation.

“Stagflation will happen in the situation which the inflation rate is high, the economic growth rate slows and unemployment remains steadily high. As young as you may not know that stagflation is a catastrophic for countries. It happened at U.S. in 1970 before.”

I google it simutaneously while he is talking.

“But not everybody will lose during stagflation. It will further widen intergenrational inequality.” He explains more.

“What can we do now?”I ask.

“Not WE, just YOU.” he laughs.

“Use your creation to generate more income as fast as you could. Within crisis, are the seeds of opportunity.” He shares.

That is the most difficult part. Everything is easier said than done. Wanting something is easy. Saying something is easy. The challenge and the reward are in the doing.

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