While several analysts and market strategists expect US inflation to drop sharply in 2023 compared to last year, Michael Wilkerson, founder of Stormwall Advisors, believes the inflation rate could go as high as 12% by late of this year. The country’s inflation rate has cooled in the past seven months, but Wilkerson insists the US Federal Reserve will “run out of firepower.”
Michael Wilkerson of Stormwall Advisors thinks the US will ‘see another spike’ in inflation
In the last two months, many reports have indicated that inflation has peaked, and in the US, the Consumer Price Index (CPI) has fallen for seven consecutive months from its peak in June 2022. in a recent interview between Kitco News anchor Michelle Makori and Michael Wilkerson, founder of Stormwall Advisors, Wilkerson expressed his expectation of another rise in US inflation. While acknowledging that his view is a minority, Wilkerson emphasized that “inflation it does not move in a linear path; you see some cycling.”
“I don’t think we’ve seen the end of inflation and I think we’re going to see another spike,” Wilkerson said during his interview. “Whether it’s 8% or 12%, I can’t say precisely what it will be by the end of 2023 either, but I do think it’s possible we’ll find ourselves in that range again this year.”
Wilkerson explained how the M2 money supply has grown since 2008 and has spiked further during the Covid-19 pandemic. As an executive at Stormwall Advisors and the author of “Why America Matters: The Case for a New Exceptionalism,” Wilkerson asserted that the increase in the money supply inevitably results in a concomitant increase in prices, as historical patterns show. He believes that from the politicians’ perspective, inflation is a preferable option as it is the “lesser of two evils”.
“The Federal Reserve is going to run out of firepower,” Wilkerson told Makori. “Ultimately, this becomes a trade-off between controlling inflation, slaying the inflation dragon, and allowing recession and unemployment to rise. And governments always and everywhere choose inflation,” he added.
Several analysts and economists believe, however, that inflation will decrease this year. For example, economist Mohamed El-Erian of the University of Cambridge expects inflation to become “sticky” around 4% by mid-year. Adam Posen, president of the Peterson Institute for International Economics and a former Bank of England official, anticipates that US inflation will reach the 3% range by the end of 2023. in,” Posen saying at the end of December 2022.
During his conversation with Makori, Wilkerson shared a contrary view, emphasizing that price inflation would eventually catch up. “The money supply has increased by 40 percent just since the year 2000,” Wilkerson said. “There has never been a time in history when the money supply has increased so much without causing inflation: price inflation always catches up with money supply inflation.”
Do you agree with Wilkerson’s contrary view on inflation, or do you think other economists’ predictions will come true? Share his thoughts on this subject in the comments section below.
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