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Marcel Slootweg's avatar

The link is broken because of the rise of another inflation: asset inflation. Due to globalization the CPI hasn't risen since the late nineties. But when you look at the rising prices of assets (not only real estate, but also securities and private markets) there is definitely a correlation between the balance sheets of the central bank and asset inflation. It's not clearly positively correlated. Yields have also dropped because of globalization, demographic developments in the West and Japan and technological innovations. But there is a rise in asset inflation. When you look at social developments in Western societies, you see a division emerge between 70% haves and 30% havenots. I think that's the main social-economic problem for Western societies at the moment....

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PeterN's avatar

Ironically, this 30 year period exactly coincides with neoliberal deregulation, wrestling inflation to the ground, the creation of the gigantic wealth gap and the complete disenfranchisement of the working class in terms of any influence (good or bad) on public policy and their own income. Given this chart and your previous discussion of MMT is there perhaps a link between why MMT might actually hold true at least for the forseeable near mid-term future? Maybe it is a good time for fiat currency governments to start reinvesting in all the neglected infrastructure and social programs.

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