When governments around the world began implementing massive stimulus plans to lift the global economy from a deep recession, opinions were sharply divided. While it seems that these plans have been successful in the short run–as evidenced by the remarkable rally over the last 13 months–some investors have become increasingly concerned about the long-term impact of such significant spending. Most of these concerns have centered around the prospect of runaway inflation resulting from a huge increase in the money supply. While current inflation at nearly zero, almost everyone believed that some upward movement was inevitable, but the magnitude of the increase was the subject of much debate; estimates ranged from the high end of the Fed’s “comfort zone” to well into double digits. [click to continue…]
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