Central banks printing money leads to inflation. It sounds right... right? Not so fast.
For US investors, the 1970s era of elevated inflation and the early 1980s Fed-induced recession still eludes recency bias. We are conditioned to believe that massive amounts of quantitative easing and low interest rates should spark an imminent explosive period of higher prices. The data is rolling in, and it suggests we are moving toward deflation despite central banks buying $2.4 billion in financial assets each hour, according to Martin Baccardax of TheStreet.
I concede that base rates are important when