Expect Inflation, Bubble Burst, then expect the next recession. Murray Sabrin, Steve Forbes Warns.
Bubble Burst Explained
An economic bubble takes place when the price of an asset e.g house, land, goes up far above the asset’s real value. For instance, the intrinsic value for land in a particular area in the United state might be $100,000; but because of a sudden high demand for land in that area, the prices of land will go up far above the normal value. This doesn’t happen forever, it’s likely to come down, therefore, giving room for what is called a bubble burst or crash.
Murrays’ 1976 Speculation
In 1976, Murray Sabrin, a professor of finance in the United States warned against the Fee’s inflationary policies of 1976. Here was what happened thereafter, consumer prices rose 5.7% in 1976, 6.5% in 1977, 7.6% in 1978, 11.3% in 1979 and 13.5% in 1980. He was right.
Murrays’ 2021 Speculation
Now in 2021; the economic oracle has made yet another speculation; which is likely will come true based on current happenings. He speculates that Inflation will increase in 2022. Once there is too much money in circulation, prices of goods and services will increase, public outcry and media reports will likely force President Biden to impose wage-price control. Without price controls, the Fed is expected to raise the Fed Funds rate in 2022 and to continue tightening in 2023. Therefore, the next recession could begin in the Fall of 2023 but no later than a year later.
Steve Forbes’ Speculation
Steve Forbes also wrote a very similar article, where he believes that the Stock Market Bubble Will Burst And Inflation Will Follow.
“The Fed is underestimating the massive amount of money printing it will have to do to finance the largest peacetime spending the U.S. has ever engaged in. Banks, foreign governments, and U.S. agencies—chiefly Social Security, which is no longer running large surpluses—are not going to be the big buyers of bonds, as has previously been the case.”
“That leaves the Fed doing the heavy lifting, and the scale of money creation it will need to do will fire up sizable inflation. Then there are the enormous tax increases that Democrats are determined to enact on capital gains, businesses, higher incomes, gasoline, car mileage, energy, inheritances, and more, which will whack the nascent recovery later this year and in 2022. The economy has real strengths coming out of the pandemic, but it won’t be able to withstand the magnitude of these abuses”.
