The BIS, the central bank of central banks evokes global stagflation.

The BIS, the central bank of central banks evokes global stagflation.

As you know, there is no problem, France will not experience a recession and everything will be fine.

Well, on the side of the BRI, if we are not yet in recession, we are getting closer to it with the risk of stagflation.

The BRI is now clearly considering the possibility of global stagflation

“The annual report of the Bank for International Settlements (BIS), sometimes called the ‘central bank of central banks’ was released on Sunday, and as you might expect, its analysis of the global economy is quite grim.

“At a minimum, a period of below-trend growth will be needed to bring inflation down to acceptable levels. But a modest slowdown may not be enough. Reducing inflation could involve significant production costs, like after the “great inflation” of the 1970s,” the report reads.

The BIS has thus clearly envisaged a scenario of stagflation: “In the worst case, the world economy could be engaged in a period of stagflation, involving both weak growth, or even an outright recession, and high inflation. . »

Ha… actually yes, the BRI still mentions the risk of recession.

But we in France, as we are all vaccinated and well we are all protected, also from the recession, it is even Bruno who said it! And na!

“Agustín Carstens, Director General of the BRI, also underlined the seriousness of the situation:

“The current combination of high inflation and historically high debt levels is unprecedented,” adding, “For too long, fiscal and monetary policy has been the economic option of choice, driving debt-fueled growth. They are now at their wit’s end.”

“As monetary policy tightens, tensions with fiscal policy will emerge. As monetary normalization accelerates, growth rates are likely to be closer to, or even lower than, interest rates”

In fact, they are frankly pessimistic at the BRI!

“The baseline is stagflation – what we’re going through right now,” Mohamed El-Erian said, implying that it’s going to get worse and worse: “So you have a baseline that’s not very comfortable, stagflation, and then you have a balance of risks that goes the wrong way – recession. »

It’s quite logical what the BRI says and it’s not me who’s going to say they’re wrong!

On the contrary.

They are right.

We’re going to start with stagflation and we’re right in it as you read this. Growth is at 0 at best and inflation at 8%. This is the very definition of stagflation.

But in economics, nothing stagnates for very long. Either it goes up or it goes down.

And if the economy is not growing, then it is shrinking.

With rising inflation and rising rates and rising energy, and even energy shortages, it’s going to be difficult to grow.

So it will be recession!

Charles SANNAT

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Source Reuters via Investing.com here

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