JP Morgan Chase CEO, Jamie Dimon, notes:
Many key economic indicators today continue to be good
and possibly improving, including inflation. But when looking ahead to
tomorrow, conditions that will affect the future should be considered. For
example, there seems to be a large number of persistent inflationary pressures,
which may likely continue. All of the following factors appear to be
inflationary: ongoing fiscal spending, remilitarization of the world,
restructuring of global trade, capital needs of the new green economy, and
possibly higher energy costs in the future (even though there currently is an
oversupply of gas and plentiful spare capacity in oil) due to a lack of needed
investment in the energy infrastructure. In the past, fiscal deficits did not
seem to be closely related to inflation. In the 1970s and early 1980s, there
was a general understanding that inflation was driven by “guns and butter”;
i.e., fiscal deficits and the increase to the money supply, both partially
driven by the Vietnam War, led to increased inflation, which went over 10%. The
deficits today are even larger and occurring in boom times — not as the result
of a recession — and they have been supported by quantitative easing, which was
never done before the great financial crisis. Quantitative easing is a form of
increasing the money supply (though it has many offsets). I remain more
concerned about quantitative easing than most, and its reversal, which has
never been done before at this scale.
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