The Year of the Hangover?

Source: Ludwig von Mises Institute
by Daniel Lacalle

“Twenty twenty-one was a year of massive demand-side policies. To the effect of the reopening, policy makers added enormous deficit-spending plans, infrastructure and current spending boosts, and a massive monetary stimulus. The triple effect of the largest monetary stimulus in years, the reopening, and enormous government spending programs have overheated the economy. It is evident in inflationary pressures, housing, indebtedness, and twin deficit imbalances in most large economies. And those effects will not be there, or at least be present in the same proportion, in 2022. Twenty twenty-one was the year of binge spending. Twenty twenty-two is likely to be a hangover.” (01/10/22)