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2021-11-20T11:09:48.543Z


Anyone who wants to maintain the purchasing power of their assets in the long term needs real assets. Unfortunately, savings accounts and fixed-term accounts do not help, writes Bert Flossbach, the head of the well-known Cologne asset manager Flossbach von Storch, in a guest post. 


Anyone who wants to maintain the purchasing power of their assets in the long term needs real assets.

Unfortunately, savings accounts and fixed-term accounts do not help, writes Bert Flossbach, the head of the well-known Cologne asset manager Flossbach von Storch, in a guest post. 

Munich - Inflation is back.

And there are some indications that it will remain, even if the delivery bottlenecks * and shortages caused by the corona pandemic should resolve again in the coming weeks and months.

Which, by the way, has to be provided with one or two question marks.

Then there are the so-called second-round effects. Take the trade unions as an example. Their negotiators will certainly refer to the general price development in the upcoming wage negotiations and ask for a lookup; especially since there is a desperate need for skilled workers in some industries. Higher wages drive inflation.

Voice of economists


Climate change, delivery bottlenecks, corona pandemic: seldom before has the interest in business been as great as it is now.

This applies to current news, but also to very basic questions: How do the billions in Corona * aid and the debt brake fit together?

What can we do about the climate crisis without jeopardizing our competitiveness?

How do we secure our pension?

And how do we generate the prosperity of tomorrow?


In our new Voice of Economists series, Germany’s leading economists are now providing guest articles with assessments, insights and study results on the most important topics in business - profound, competent and opinionated.

Always on Saturdays.

Inflation is here to stay

Not to forget the three “D”: deglobalization, decarbonization and demography. They are likely to push inflation in the long term. If globalization is partially reversed, for example if production sites are relocated from low-wage countries back home, production costs rise. The decarbonization of the economy, the conversion to a more resource-efficient economy, has its price. Demography and the aging of the population, in turn, reduce the supply of skilled workers; Those who remained on the labor market can look forward to significant wage increases.

So the bottom line is that there is a lot to suggest that inflation rates in the coming years will be (more) above the two percent inflation rate that the European Central Bank (ECB) regards as “stable”.

And actually that would mean that the ECB would have to raise interest rates to keep inflation in check.

In truth, her hands are tied and her options are limited.

Because if they raise interest rates significantly, many debtors would no longer be able to pay their debts;

because they have long since outgrown them - and not just since the pandemic outbreak and the huge corona aid packages.

A significant increase in interest rates would not be manageable for many debtors

This applies to states, to companies, but also to many private individuals.

Let's take one or the other real estate buyer as an example: A wave of bankruptcies would be the result of any overly ambitious interest rate hike, massive upheavals on the real estate markets, and possibly the next crisis in the monetary and financial system.

No central banker, no central banker will (want to) risk such collateral damage from a stricter monetary policy.

So the interest remains low because it has to.

Because the central banks cannot do otherwise.

From their point of view, any upward adjustment should therefore be little more than an attempt to pretend that everything is still under control.

As long as inflation does not get completely out of hand, the consequences are manageable.

Only when people seriously question the stability of the value of money and no longer use money as a store of value would this change.

To do this, however, inflation would have to reach a double-digit level over the long term, which is not to be expected.

Passbook fans and bond owners should rethink

Passbook fans or bond owners should not ignore the current development.

With an interest rate of zero, three percent inflation is enough to decimate the real value of an asset in the long term.

also read

Traffic light coalition bears enormous responsibility

If Germany does not want to gamble away the future, public investment must increase sharply.

Not sometime, but now, writes the director of the union-related Institute for Macroeconomics and Business Cycle Research (IMK), Prof. Sebastian Dullien in the guest article.

Traffic light coalition bears enormous responsibility

The green boom and its enemies

Since the Corona crisis, many things are no longer the same - also in the economy, writes the chief economist of Allianz, Ludovic Subran in the guest article.

The green boom and its enemies

Sand in the gears of industry is holding back recovery

German industry is currently in an unusual position: the order books are more full than ever before.

But production stalls because important preliminary products are missing.

This is slowing the upswing and is costing companies a double-digit billion amount in the current year, writes Ifo economic expert Prof. Timo Wollmershäuser in a guest article.

Sand in the gears of industry is holding back recovery

In this environment, stocks and gold are the only liquid asset classes that will provide protection against inflation and real growth in value in the future.

That wouldn't change if inflation fell again.

Only a significant rise in interest rates or a permanently shrinking economy would reduce the attractiveness of stocks.

From today's perspective, both seem unlikely to us.

But that does not mean that the stock markets cannot fluctuate significantly in the meantime.

The stock market will not completely ignore the risk of rising interest rates, but will take it into consideration more and less, even if it becomes more and more obvious that there will be no “interest rate turnaround”.

But if you want to buy stocks, you should look carefully.

The choice is more important today than ever.

After all, a permanent rise in inflation rates is a challenge for companies.

Not all will master them.

A high level of competitiveness, profitability and far-sighted management are particularly important in such an environment.

So not all shares are the same.

Dr.

Bert Flossbach is the founder and board member of Flossbach von Storch AG in Cologne.

* Merkur.de is part of IPPEN.MEDIA

Source: merkur

All news articles on 2021-11-20

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