Bernstein analysts suggest the scale and social impact of the public policy response to the COVID-19 pandemic will ultimately prove inflationary

Bernstein analysts suggest the scale and social impact of the public policy response to the COVID-19 pandemic will ultimately prove inflationary

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3 Comments

Only when spending exceeds the capacity of the economy to produce goods and services does inflation occur. It is the spending that can create inflation, regardless of the source of the money and the NZ economy is a long way from being at full capacity. The purpose of taxation is to delete currency and so maintain the value of the currency and prevent inflation and any spending greater than taxation simply adds to private savings.

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Does Bernstein ever check the sovereign bond market for clues to future inflation expectations?

https://www.zerohedge.com/markets/20y-treasury-prices-record-low-yield-a...
https://fred.stlouisfed.org/series/T5YIFR/