Crystal Ball - High Inflation & Interest Rates?

[superhans88]

With the government about to pump vast amounts of money into the economy, is there a significant risk of high inflation once things get back to normal? Could this mean a return to the high interest rates of the 80's & 90's to try and combat it?

Are there any circumstances that could prevent this from happening? These are obviously unprecedented times and I don't think anyone can accurately predict how severe the economic fallout from all this will be, but I would be interested to hear from others who know more about these things than me!

[dmahon]

I don’t see this as inflationary. It’s keeping the economy on life support, with everyone taking haircuts left right and centre. At the same time, hundreds of billions will be wiped off stock markets, properties, businesses. I assume we even end up with less money in total assets than before.

I also think it would play out over year long time horizons. When things go back to normal, nobody will be in the mood for spending and we will have record numbers of unemployed.

Longer term, I think there is an advantage to governments to inflate away the debt, but that’s something to look out for when we are well on the other side of this.

No expert though.

[IanJ9375]

I've a feeling a lot of businesses will be deemed surplus going forward and take a hit - a bit like how the country found that Aldi & Lidl shopping was cheaper than Tesco in particular following the financial crisis. I don't think high inflation will kick in as I imagine a lot of people will be a lot more cagey with their money, had confidence returned fully following 2008/2009?

Popular restaurants will be packed out once this lifts, some of the so-so one's will find themselves not so loved?


I guess that something like this focuses the mind on what you actually want, that life's too short etc