Ishfaaq PeerallyWe won't see HYPERINFLATION in AMERICA
In 2020, the M2 Money Supply of the United States increased by 25%. Why don't we see higher inflation yet?
๐ธ ๐๐๐๐ฉ ๐๐ญ๐๐๐ฉ๐ก๐ฎ ๐๐จ ๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ? Is it an increase in money supply or an increase in prices? Actually, there are different types of inflation:
1. Monetary inflation - something we're already seeing with the Federal Reserve System printing money through Quantitative Easing (QE)
2. Asset Price Inflation - Another type of inflation we're seeing with increased in stock prices $SPX500 , bond and gold $GOLD prices in a recession. With the Fed printing money by buying bonds, it forces the price of other assets to go up as investors choose these assets over the low yield bonds.
Monetary and Asset Price Inflation affects mostly people who own financial assets.
3. CPI Inflation (Consumer Price Index Inflation) - This is increase in prices of goods
4. Core Inflation - same as CPI inflation but adjusting for changes in oil $OIL prices
๐ฐ ๐พ๐๐ ๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ ๐๐จ ๐ฉ๐๐ ๐ข๐ค๐จ๐ฉ ๐ฆ๐ช๐ค๐ฉ๐๐ ๐ค๐ฃ๐ ๐๐ฃ๐ ๐๐ฉ ๐๐จ ๐ฆ๐ช๐๐ฉ๐ ๐ก๐ค๐ฌ ๐ง๐๐๐๐ฉ ๐ฃ๐ค๐ฌ. There are several reasons for this, such as low oil prices, the pandemic and recession. With low economic activities, people are not spending much money, hence, low inflation.
Will a return to normal economic activities cause higher inflation? Yes. Even the Fed may cause ๐๐๐๐๐๐ง ๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ if they want to force interest rates to remain low.
โ ๏ธ But ๐ฌ๐๐ก๐ก ๐ฌ๐ ๐จ๐๐ ๐๐ฎ๐ฅ๐๐ง๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ ๐๐ฃ ๐ผ๐ข๐๐ง๐๐๐? ๐๐ค. Hyperinflation means a 50% increase in prices in a month. This is very unlikely to happen in America with the US Dollar still the reserve currency of the world and almost all other countries heavily indebted (much of which denominated in US Dollars) and QE in much of the developed world. The demand for US Dollar is still here.
We will certainly see higher inflation in the US but hyperinflation is very unlikely.
Watch the full video on YouTube:
https://www.youtube.com/watch?v=l2Nl0rkvU_A&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=1
๐ฌJoin my INVESTMENT RESEARCH PARTNERSHIP for all my analysis and research, along with a course for investing for beginners for free๐ฌ
https://ishfaaqpeerally.teachable.com
๐ New to investing? Here's my investing COURSE FOR BEGINNERS with over 150 lectures ๐
https://ishfaaqpeerally.teachable.com/courses/enrolled/721696
๐ฃ๏ธJoin my private investing FACEBOOK GROUP for more ๐ฃ๏ธ