I don’t think gzz said anything about lack of inflation. His prediction is about rate, which is about oversupply for saving v.s. market demand for those saving.
If I understand him correctly. He is saying that demographic change creates more savings and the rich also has excessive saving, that they will accept however low returns due to these excessive savings that there’re not enough market demand for it (e.g. lower corporate investment demand).
Correct. And whether inflation is 1.5% or 5% has very little to do with this.
Did we have articles about the positive effects of inflation in the mid to late 70s?
No, but the political system was not so biased in favor of hard money elites, meaning inflation was possible, and officeholders feared high unemployment and low wage growth more than inflation.
Now officeholders are either or both hard money true believes and want to work for elites at elite salaries after they leave office. “Inflation isn’t coming, but it would be a good thing if it did” is a disqualifying statement for most elite jobs.
The politically correct thing is to mouth the right combination of worries about hyperinflation, “money printing” and “bitcoin solves this.”
The data displayed there shows an increase in savings rate relative to GDP but not a substantial increase.
I think your link supports my point that there’s a secular trend toward higher desired savings due to population aging and the rich getting richer and lacking consumption opportunities to spend money on.
Savings increased slightly as a share of GDP even though interest rates went down relentlessly.
Never recover? My math might be bad, but I think Never sounds like a very long time. Never?
In my own experience, and that of my family and social circles, there has been and is an enormous pent-up demand for travel and any variety of outside the home activities.
Never recover to their prior share of the economy is what I should say. Maybe their nominal size will eventually hit 2019’s.
Also, even if you’re right about pent-up demand, supply is also impacted. I’d like to go on fun business trips to LA/SF and fancy restaurants at the same rate I did at 2017-2019. But the experience of both are degraded AND more expensive. Just one example of how the demand is there, but that’s not enough.
