What price globalisation?

The globalisation of the world economy has brought with it many benefits, but also two significant risks: inflation and protectionism. Niels C. Jensen considers wherein lies the greatest danger.

"The degree to which inflation/deflation matters depends upon the nature of its sources, and upon whether it has been expected. In today's environment, accelerating inflation has not been expected, and would have adverse consequences. Thus the Fed and the markets should worry about inflation just as they currently are."

These lines were written by our economic advisor Woody rock in his September 2006 report named Inflation Its Origins and Likely Behavior'. Woody could not have known that some four months later, having glimpsed an inflation report just prior to publication, the Bank of England would be forced to raise UK interest rates by another 0.25% to 5.25% to the consternation of UK investors, most of whom did not see this one coming.

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