Key insights
- The author posits that governments, burdened by high debt, may prioritize policies leading to hyperinflation (low rates, high inflation) over stagflation (high rates, high inflation) to erode debt through growth. This scenario, while potentially benefiting debtors, poses significant risks to asset values and purchasing power, creating a bearish outlook for equities due to economic instability and uncertainty.
just few weeks ago, I was so certain that the economy was heading into stagflation
but each passing days, more and more I'm convinced world is heading into hyperinflation
what is the best investment to make during hyperinflation?
my reason is that even with high inflation because governments hold too much debt and everyone is leveaged to the tits with debts, with fear of economy slowing down, governments would rather push policies that will cause hyperinflation rather than stagflation (keeping low interest rate despite skyrocketing inflation leading to hyperinflation instead of high interest rate causing stagflation)
with hyperinflation (high inflation, low interest rate leading to higher inflation but aiming for growth), governments can still gain economic growth while eroding insane level of government debt.
aiming for stagflation (high interest rate, high inflation, low growth) would basically be suicidal from government's point of view