Making the Markets; Inflation with a vengence

Today not only marks my return to the blog; but the real start of Brexit, as English stomachs begin vomiting economic downfall in their own borders.
I returned to my opinion column, as what any goth can tell you they are good at, feeling bad things are about to happen.

Inflation & Abenomics

The regressive move of initiating article 50, will effect growth. However let us not forget about growth's eviler more volatile brother; Inflation. For the last decade this chap has been really quiet. In some cases such as Japan, they are doing their upmost to increase it. The so called complexity of Abenomics aka the John Maynard Keynes Hybrid.

• For Abenomics to succeed, Japanese consumers will need to reverse  deflationary forces of excess saving and encourage an increased propensity of consumption.
• Age: the unsustainable ratio of the elderly to the working population, fallout should fiscal stimulus fail, and snowballing costs for imports.
• Abe’s structural reforms carry with them several risks. The domestic agriculture sector could suffer from increased marketplace competition should tariffs on imports be removed.
• Any agreements with the TPP would mean greater dependency on government support among Japanese farmers, adding a further load on finances.

But the characteristic of inflation can be very underestimated. Primarily it's effect on domestic trade, especially in protectionist countries. I.E. The soon to be USA & UK.

Great Depression background

The last time a developed country experienced inflationary issues due to protectionism mixed in with specialisation, was the time of the great depression. Domestic growth was steadily increasing, as was full employment. Though the balance of payments of the United states was terrible, as well as domestic borrowing. Eventually leading to over production, due to trade barriers eliminating any trade advantage being exported, leading to the value of USD dropping and the cost of living increasing until the fatal Black Tuesday.

The Human reasoning

Behavioural economics shows a desire of more inward looking domestic buying, and the likelihood of imports been desired decreasing, due to political & social thought. Yet the knock on effect is a reduced import volume, at the same a reduced desired to employ necessary labour to foreigners, where the greatest supply to meet the demand is found for less desired roles.

With what people around Europe and North America are believing in as a necessary solution to fight globalisation is to bar immigrants and Refugees from crossing their borders. I can understand their frustration. Yet, on a 21st century political wheel and democratic legislation and time consumption being in place, this position of thought, is a very dangerous one for setting off the demon of inflation.

The Diabetic shock

Combine the GDP demon with the perceived cost of borrowing and its desire to increase, however still artificially low, to keep the economy fat. If an obesity bubble kicks off. Hiking rates, is like giving the fat man no more sugar and tons of insulation. Eventually he will have no more sugar to keep him alive. We can see that the US Fed is letting the man off the sugar, as inflation is making itself. Part of the advantage when comparing now to black Tuesday, is the fact the Central Banks are prepared to combat it, where as in 1929 they stood by and watched