Dreaming of Stagflation

When bad dreams become real our future could feature a 1970s nightmare.

Dreaming of Stagflation

I get the sense that the past few months have been a dream. Whether it was a good or bad dream depends on your personal experience but it now doesn’t seem very real.

Sure, we still have irrational and hypocritical restrictions in place but few seem seriously fussed about it all. The pubs and restaurants are back in business and people are milling about in the streets and parklands.

Of course you can still get fined for attending a wedding or a funeral but you could always declare it was a protest in favour of some PC cause and you’ll be right.

That’s because the Court has upheld that your right to protest trumps public health warnings. Frankly I find it amazing that so many meekly surrendered their rights to assemble with nary a whimper but it takes a faux outrage protest rally to show how silly things have gotten.

Apparently we have ‘beaten’ this recent CoronaVirus  and ‘avoided’ 200,000 potential deaths by shutting down our economy. Many months ago I called BS on that figure and the pandemic alarmism and nothing since has changed my mind.

I know that people have died with CoronaVirus but largely these were people with low life expectancy already. In fact, globally many deaths have been attributed to CoronaVirus even though it wasn’t the actual cause of death.

That’s part of the reason you cannot trust the statistics. They are usually manipulated to suit the preferred narrative.

But here is one piece of information that I found interesting.

Sweden was one country that bucked the global shutdown scenario. It has been widely panned for allowing common sense to prevail and for keeping their economy functioning. As a result they were accused of causing needless deaths.

The stats tell a slightly different story.

Sweden has somewhere between 88-92 thousands deaths annually. To the end of May, around 44K deaths had been reported. That roughly puts them on track for the upper end of their annualised mortality rate.

My point is that their overall annual mortality rate this year is unlikely to be dramatically higher than what it has been in recent years.

It’s a similar scenario in many other countries - whether they locked down or not. Annualised mortality rates aren’t leaping or crashing as a result of the  CoronaVirus experience. Naturally there are some changes in relation to specific causes of death (road accidents etc) but it's an interesting point to ponder.

Was the 'cure' worth the cost?

Many will say it was because we seem to have quickly cast off the shadow of the dreaded plague of 2020.  The sharemarkets have bounced back, reflecting an optimism about our economic future so everything must be okay.

Unfortunately, just like with the pandemic panic I am calling BS on that optimism. Things have radically changed and it will be a long while before the full extent of the damage done during the dream becomes evident.

Right now, the bulk of the bad news has been absorbed by government spending. That will dry up. The hundreds of billions in deferred loans, rents and repayments will come due later in the year. The job keeper program ( which has kept many businesses alive) is scheduled to be shutdown. So too is the bonus jobseeker measures.

China is encouraging their students and tourists not to come to Australia. I am happy about that but it will prove to be a bitter economic pill to swallow for all of us.

We can also expect a trillion dollar national debt figure at some point in the years ahead although fewer people seems to think debt actually matters anymore.

It all paints a fairly bleak economic picture in the next twelve months or so which is why I am not getting swept up in the recovery euphoria.

In my view, our future could feature a 1970s nightmare as we revisit the curse of stagflation.

If that happens this has been a very bad dream indeed!

Great! You’ve successfully signed up.

Welcome back! You've successfully signed in.

You've successfully subscribed to Confidential Daily.

Success! Check your email for magic link to sign-in.

Success! Your billing info has been updated.

Your billing was not updated.