Structurally higher inflation not inevitable

The link between money printing and inflation has broken down

Joachim Klement

Joachim Klement headshot

The spectre of inflation raising its ugly head is one that haunts investors all the time. And while there is indeed a possibility of runaway and persistently high inflation in coming years, this is by no means a done deal. In fact, I find Cassandras who claim inflation is inevitably going to remain high make these forecasts based on an outdated and flawed understanding of the link between monetary policy and increases in consumer prices.

Originally, I thought I could just put these Cassandra calls to bed by linking to my many posts in the past where I have shown the data that refutes the argument of inflation Cassandras, however, I fear I have to write yet another explanation as to why inflation is more likely to calm down than stay high or increase...

Joachim Klement is investment strategist at Liberum Capital and author of the Klement on Investing blog

This article first appeared in ETF Insider, ETF Stream's monthly ETF magazine for professional investors in Europe. To read the full article, click here.

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