Don’t Expect a Goldilocks Economy

Most products are cheap these days. But that doesn’t last. Creating a sustainable world is important. However, it will depend on the number of items. These products can only be produced in sufficient quantities if prices are high enough to motivate producers.

Goldman Sachs (NYSE: GS ) says copper prices will need to rise about 30% to meet future demand. The current recession has slowed demand. A recession will not change the amount of copper needed to build power ships and related equipment. In fact, whatever copper is not produced today only adds to future needs.

Even apart from concerns about climate change, establishing a sustainable economy may take a long time, meaning that without boosting prices today for copper (or any commodity), there will be periods of scarcity and lower commodity prices in the future.

No Hope for a Goldilocks Economy

One big implication is that you cannot separate growth from inflation. Central bankers will have to abandon any notion of a Goldilocks economy. And the US and the West will have to accept that it is important to work with countries whose cultures or governments we do not like.

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Let’s face it: The Federal Reserve does not have the power to manage the economy. Its twin responsibilities, employment and inflation, have become a joint responsibility.

In action and in words, the Fed has signaled that it is focused on slowing the 40-year rate of inflation that has been building throughout the economy. Many compare it to former Fed Chair Paul Volcker’s fight against inflation in the late 1970s and early 1980s. But Volcker had advantages that his successor Jerome Powell lacked.

Basic Needs

Back then, the main contributor to inflation was the rise in commodities led by oil. But unlike today, this showed a temporary shortage, not a real shortage.

Also, today the distribution of oil and other products is very common in the South East, where we are not doing anything. It is surprising that while the western countries are facing financial problems, the Russian economy has slowed down and is growing by 4%.

In the face of Russia and China, we are at great economic risk. For the US, I think the only way out is to unite. For investors, the message is to continue to focus on precious metals and gold.

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It’s a new world. We hope it will be fresh and good.

Resource Management and Economic Power

Countries with more resources are now closely related to those with more economic power. Ultimately, this can cause things, including oil, to deteriorate.

Until recently, the US central bank held sway over the world economy. But today the world is in the middle of a great chaos that has lost the old book of laws. One result, somewhere along the curve, could be a unified world where efforts are made to make decisions…whether for oil, money making, etc…that are good for all.

Okay, I know this sounds utopian. And this front can be a great fluctuation, which leads to any great change.

My predictions are based on my observation of the world’s largest economic organizations, such as the Shanghai Corporation Organization (SCO) and the BRICS (Brazil, Russia, India, China, and South Africa), which on an absolute scale have more natural resources than the rest of the world.

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I hope the contestants work together

Russia is a member of both groups and Saudi Arabia has expressed interest in joining both. It shows me that a big swing in the future can have a long-term beneficial effect.

This, I hope, will be a lesson from the war in Ukraine. Today, big problems cannot be solved with money; they want international cooperation.

For investors, the most important thing is that goods and assets are now working for a long time, not commercial vehicles. It can be unstable, sometimes very, but unlike before it will be biased for a long time.

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