Bridgewater - Is Stagflation Next?
Members of Bridgewater discuss the risk of stagflation on the horizon due to recent fiscal and monetary policy. Greg Jensen, Co-CIO, and Jim Haskel, Senior Portfolio Strategist, confer on how policies used in 2008 were to stop-gap a lack of credit in the system, but in 2020 we are experiencing different underlying issues. The Fed’s power is nearing exhaustion, and if things worsen, the Fed will likely need to inject money into the economy. Coupling this with restrictions and breakdowns in globalization, we may find that the imbalance between supply and demand will create an environment of inflation and potentially stagflation.
- Monetary policy, reduction in globalization, and fiscal policy are all pointing towards inflation. Technology is one big factor that still points towards deflation.
- Weak economic conditions and higher inflation is very problematic, and similar to what the U.S. experienced in the 60s and 70s.
- Bridgewater recommends finding a way to diversify in other investments than nominal bonds.