– May 2020 –

Helicopter Money

We’ve never seen the phenomenon of simultaneously higher equity prices and a shift higher in the VIX curve without a state of hyperinflation; except at the start of Abenomics for 1-2 months in 2012 and maybe now…

But it’s a HUGE ask to imagine that April’s moves in VIX and SPX, allied to promises of further gigantic central bank printing, will prove a precursor to runaway inflation. But heck, let’s give it a go…

Crudely put, it seems more likely that this 2020 helicopter money is simply filling the great landfill dump left behind by the furloughing of the global labour market this year; that the CBs have replaced the normal monetisation that would emanate from an active labour force.

What might deliver a tipping point – where bank printing outweighs every other factor and we experience runaway prices? Clue: the answer is always in what I don’t write.

I’m going to attempt this thought exercise tonight.