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Inflation or Deflation - What Happens Next?


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Published on Apr 18, 2020
With such an unprecedented synchronised global growth shock and fiscal and monetary stimulus, many people think that we will get either deflation or inflation over the coming months. This video looks at the causes of deflation and inflation, how fiscal & monetary policies can influence it, what history can teach us and we examine some of the forecasts about what will happen next.

Here is the link for the FRED inflation probability graph I mentioned in the video

Video timing with thanks to Complex
00:00 Intro
00:54 What is inflation
01:12 changes in inflation incl. deflation (price of loaf of bread)
01:50 consumption baskets
03:27 What drives inflation? (different types of inflation)
05:16 size of Fed's balance sheet increasing
06:14 why didn't all the money-printing stimulate a "huge bout of inflation"
06:30 the Velocity of Money
07:30 Yellen on why no inflation
07:45 NAIRU
08:50 the Liquidity Trap
09:42 Who controls inflation
10:35 value of stocks depends on inflation; valuations highest around 2% inflation; equity de-rates either way
11:24 Hyperinflation
12:00 case of Zimbabwe
12:40 case of post-WWI Germany
14:00 hyperinflation helps/hinders if ...
15:10 Deflation
16:00 inflation 1870-1920
16:28 deflationary spiral
17:38 deflation helps/hinders if ...
18:34 What to watch
18:42 FRED/Price Pressures Measure (PPM) index
19:26 PPM model description
19:50 BoE Monetary Policy report, fan charts
20:34 Forecasts
22:00 forecasts of NIESR (UK)
22:44 negative interest rates in Euro-zone
23:40 conclusions

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