Why Bond Investors (and Wise Men) Got Inflation Wrong
Recent history has tended to mock the financial worrywarts, and for understandable reasons.
The pessimists are out in force.
Photographer: Tasos Katopodis/Getty ImagesNow that President Joe Biden's $1.9 trillion coronavirus relief bill, overwhelmingly supported by voters, is law, rampant inflation suddenly is being conjured as the threat to American prosperity.
Among certified wise men like former Treasury Secretary Larry Summers, superstar investor Stanley Druckenmiller, money manager and onetime presidential adviser Steven Rattner, former Bank of England Governor Mervyn King and Olivier Blanchard, former chief economist at the International Monetary Fund, a consensus is forming behind Summers’s warning that “macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”