Financial Times/Chris Giles/6-26-2022
“Leading economies are close to ‘tipping’ into a high-inflation world where rapid price rises are normal, dominate daily life and are difficult to quell, the Bank for International Settlements warned on Sunday. In its annual report, the BIS, the influential body that operates banking services for the world’s central banks, said these transitions to high-inflation environments happened rarely, but were very hard to reverse.”
USAGOLD note: The other side of the current policy conundrum is equally dangerous – tightening into a recession. Central banks are likely to opt for steering a slow-boil middle course between the two evils, and in our view, that amounts to high stagflation (rather than high inflation) and possibly, if the brakes slip, even runaway stagflation. The BIS warning is likely to be ignored. Central bank heads Jerome Powell and Andrew Bailey, channeling King Canute, have already admitted they are faced with a difficult situation largely beyond their ability to control.
Image: King Canute orders the tide to halt demonstrating to his courtiers that he has no control of the elements.
