Mountain Tech Analysis

Some notes from Jim Bianco’s guest interview at Macro Voices podcast

MacroVoices #341 Jim Bianco: Inflation Is Not Going Away

• The economic conditions and order around the world are changing because of high inflation, I created some notes from Jims latest guest interview.

• Previous low inflation was based on the concept of cheap labour and immigration and low energy prices

• After the lockdowns many office workers decided to work from home and many resigned from their jobs following the government pandemic handouts. Large swaths of workers are finding it easier to find higher paying jobs now days and the opportunity to work from home.

• Wages in the developing world have also gone up especially in the manufacturing sector in China, to make matters worse the US restrictions on technological trade with China have helped in lifting the cost of hi-tech products coming from China.

• Cheap natural gas to European manufacturing powerhouse has ended, with natural gas prices up 600% over the past year with the Ukraine – Russia conflict. High energy costs are bad for the manufacturing base as they raise the price of energy, which is the most important input into manufacturing a product.

• Jim also forecasts prolonged inflation hovering around 4-5% for the next couple of years as the tight monetary policy won’t have much of an effect on lowering the inflation to the old levels of 2-3%. Gone are the days of cheap credit and easy monetary expansion.

• The great resignation has created a profound change in the employment sector causing wide shortages of staff and a bottleneck in the supply of workers.

• The current Ukraine – Russia conflict has shown us that now days energy commodities can be used as a political weapon in wars. Current weapon is natural gas, where any move from EU in sanctions results in higher gas prices and the natural gas supply pipes coming from Russia being turned off for Western Europe. This in turn causes big damage to their manufacturing sector as it loses out to cheaper competitors in other parts of the globe.

• The current world is globalised , so any disruptions in energy supply can cause turmoil in the manufacturing sector

• Inflation will be persistent in the future; it’s not going anywhere.