Inflation, in terms of both its absolute level and fluctuations thereof, will be the key issue shaping the global economy, financial markets, and our investments in the coming years. Inflation looks set to remain high, albeit with periods of acceleration and deceleration, now that the world order which the US had constructed since 1945 – a world order based on a US-centric financial system – is rapidly coming undone.
The US dollar had served as the benchmark currency for international transactions; it could be converted freely and its dominance was both backed and justified by America’s diplomatic, military, and economic might. US Treasury bonds were seen as the ultimate safe-haven asset and provided a channel for the rest of the world to reinvest the dollars it had accumulated by exporting its wares to America. Read more>