Nobel economist Paul Krugman, Election night, 2016, writing in the NY Times:
Nobel economist Paul Krugman, July 28, 2020:
As Talib has observed, most economics prognosticators do okay for some number of years – mostly due to luck – and then reality hits. I used to enjoy reading Krugman’s columns but he increasingly went off the rails into politicized nutty land.
I agree with concerns over today’s stock market valuations, however a size-able part of this is the expectation of future inflation due to governments’ mammoth money printing required to accommodate their pandemic policies’ economic destruction.
My guess, though, as good or bad as any other, is that we are already seeing asset-price inflation due to the future devaluation of money caused by money printing. That’s why the stock market is up (and gold too). Owning assets that maintain their inherent value might be a good idea. Similarly, debt that will be paid off in future deflated dollars is a traditional good idea.
There are arguments that it is “different this time” – and the demand side might not be there to support inflation’s effects on prices. We will see!
