You are currently viewing What is a central banker’s wet dream? What is a central banker’s worst nightmare?

What is a central banker’s wet dream? What is a central banker’s worst nightmare?

What is a central banker’s wet dream? 2% inflation.

What is a central banker’s worst nightmare? Runaway inflation.

Years of interest rate cutting and money printing could not jack up inflation. But one global macro-event may just trigger their worst nightmare.

Massive printing of money coupled with supply chain shock could result in too much money chasing too few goods. That’s called Hyperinflation.

What happens when inflation goes up? Interest rates go up. What happens when interest rates go up? Asset prices plunge.

What happens when inflation runs out of control? 
Hint: Germany 1923, Japan 1945 (see videos below)

Need more case studies? Try this link:
https://www.investopedia.com/financial-edge/0709/5-tales-of-out-of-control-inflation.aspx

Germany 1923 - Hyperinflation (1 min 29 secs)

Japan 1945 - Hyperinflation (5 mins)

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