Just as everyone was finally accepting the idea of deflation and negative interest rates, inflation decides to pay a return visit. In the past week, articles with the following headlines appeared in major publications around the world:
What happened? Well, towards the end of 2015 most of the world’s major governments apparently got spooked by deflation and decided to ramp up their borrowing and money creation. China, for instance, generated the following stats in 2016:
- New loans totaling 12.65 trillion yuan, or $1.8 trillion.
- M2 money supply growth of 11%.
- Debt-to-GDP ratio jump from 254% to 277%.
In Europe, the European Central Bank ramped up its bond buying program, pumping about a trillion newly-created euros into the Continental economy: