Longterm Outlook
Longterm Outlook

Longterm Outlook

Erste Asset Management Investment Team

DOSSIER POSTS

The new economic paradigm: cheap money and a very active State
The new economic paradigm: cheap money and a very active State
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The new economic paradigm: cheap money and a very active State

The economic paradigm – the leitmotif, as it were – has only changed twice in the past 200 years: in the 1930s from liberalism to Keynesianism, and in the 1970s to monetarism. Since the Great Financial Crisis in 2008, we have noticed a new economic upheaval, which has now crystallised into a new paradigm as a consequence of the measures taken to fight the corona pandemic: without a name yet, this paradigm is characterised by cheap money and a very active role of the State.

High Inflation – likely to emerge?
High Inflation – likely to emerge?
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High Inflation – likely to emerge?

At the beginning of September, the FED announced a significant change in their policy: They officially announced the implementation of “average inflation targeting”. This allows to have a higher inflation rate for a period of time instead of being closely held to the target inflation rate of 2%.
Why did the FED announce this shift in its policy? Is inflation returning in the agenda? In this article, we intend to show the policy requirements for high(er) inflation.