Brave New World - Edition 18

18 Aug 2022 | 5 Mins Read
By: Eastern Fin Research Team
#Brave New World
Deglobalization is Inflationary
  • Entire point of globalization is to 1) lower costs as a means of maximizing profits and 2) find markets for surplus domestic production. Both serve to export deflation as offshoring production keeps prices stable. Securing production from the threats of geopolitical blackmail, civil/economic disorder in the producing nations or broken supply chains requires moving essential supply chains back to the security of the domestic economy.
  • Globalization enabled mobile capital to swoop in, buy up local assets, create new markets for credit and imported goodies and then sell at the top before all the external costs of globalization came due and the credit bubble burst.


Inflation isn't transitory or within the control of central banks. The forces at work are far beyond the reach of central bankers. Cost of credit matters, but so does the supply chain. This could lead to pricing arbitrage between commodities based on the demand supply metrics (ex – natural gas in US vs. Europe). The asset allocation of this decade will be far different from that of the past 40 years.



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