Tags: Niall | Ferguson | pretty | Inflationary | Scenario | us | economy

Niall Ferguson: 'Pretty Inflationary Scenario'

Wednesday, 16 Mar 2011 11:03 AM

Inflation is set to take off, repeating the oil shock of the 1970s in the developed world, thanks to overspending, money printing by the world’s central banks, and civil war chaos in the Middle East, says Harvard economic historian Niall Ferguson.

Demand from China and fighting in places like Libya and perhaps Saudi Arabia will pressure oil prices higher, creating a bearish environment, Ferguson told CNBC.

Add the huge deficits and easy money in the developed world the result is inescapably “a pretty inflationary scenario," he said.

AP100903045902(3).jpg
Niall Ferguson
"Best case, we're about to re-run the 1970s, only with Barack Obama instead of Jimmy Carter in the White House," Ferguson said.

China is now the world’s major manufacturer, raising the ultimate question of when the dollar will lose its role as the reserve currency, Ferguson said.

It takes a long time for reserve currencies to lose their status, since holders cannot all liquidate at once.

However, investors who hold dollar-denominated assets, such as foreign central banks, are likely to reconsider their position, he suggested, saying that there is "a sense around the world that exposure to the dollar has higher risk in it.”

The Federal Reserve this week stuck to its guns on virtually zero interest rates and made no mention of any desire to end its controversial $600 billion easing policy, scheduled to expire in June.

“It’s more of the same, the Fed talking in a very conservative manner that they will not exit policy,” Andrew Busch, a global currency strategist at Bank of Montreal in Chicago, told Bloomberg News.

“We’ll see people continue to sell U.S. dollars.”

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Inflation is set to take off, repeating the oil shock of the 1970s in the developed world, thanks to overspending, money printing by the world s central banks, and civil war chaos in the Middle East, says Harvard economic historian Niall Ferguson. Demand from China and...
Niall,Ferguson,pretty,Inflationary,Scenario,us,economy
269
2011-03-16
Wednesday, 16 Mar 2011 11:03 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved