[JanisL]

At this point inflation (if it happens) will most likely be a policy driven affair since growth doesn't seem to be the main driver for monetary expansion at this moment in time. I think there's reasons this could happen with debt to GDP at such historical high levels the only way out of this is to inflate the debt away or to have debt defaults.

[anm89]

To me this is exactly right. Demand isn't what's going to drive inflation, demand strength is still running on fumes from the previous fiscal bazooka. What will drive inflation will be the inevitably monstrous fiscal response to whatever the next catastrophe is where rates start near zero and the Fed balance sheet is already enormous.

I think we have basically seen the peak of inflation for this short term iteration but absolutely have not seen the last of it for this decade.

If anything the lack of demand could be the impetus for the coming stimulus and therefore inflation.

[JanisL]

I think the stimulus feedback loop you mention is exactly the situation that could provoke strong inflation. Were the markets free of this intervention/interference I'd be strongly in the deflationary camp because fundamentals worldwide are not good at all. But that's the bothersome thing, since the repo crisis of 2019 I've not been bullish on fundamentals but yet asset prices just keep inflating regardless. The pullback in 2020 being the shortest bear market I've ever seen followed by all time highs is what changed my mind on the potential of inflation, before that point I just didn't see it as possible at all given the weak global fundamentals. But yet there we say a situation where fundamentals were terrible but the market rebounded so fast. The upside-down stimulus driven market where bad news implies more stimulus implies higher asset prices could turn what would traditionally have been a strongly a deflationary situation into one where inflation occurs via rampant monetization and fiscal/monetary interventions. The question I keep asking is if the interventions can outpace the deflationary fundamentals? The introduction of Central Bank Digital Currencies would be a major change if for no other reason than they allow more monetary interventions to be done faster and more directly than before.

[anm89]

Strongly agree that the strongest indicator that inflation is on the way would be an official CBDC release.

At that point I'd essentially be all in on hard assets

[bullen]

Energy inflation has to happen, but it won't behave like the salary inflation of the 70s and 80s.

Interest rates also behave differently when 99% of "money" is debt.

Debt is GDP which is unrealized monetary inflation because velocity deflation has been equal, all these things are virtual; energy is not!