Central bankers and policymakers are struggling to quell surging costs — but despite their efforts, Saxo Bank’s Steen Jakobsen believes it is a Sisyphean undertaking. Inflationary pressures are already akin to a “runaway train” that “will not moderate” over the rest of 2022 or the near term, he warns.
Jakobsen, chief economist and chief investment officer at the Danish firm, notes that for two decades, investors have been served well by “endless policy support” through which “infinite monetary easing” has become the norm. Private balance sheets were put in their “best shape ever”, as each market hiccup was soothed by policymakers stuffing the speeding train full with economic stimulus, leading to the world’s financial economy growing at the expense of the “real economy”.
“In an intangible business, most of the value sits in intellectual property, technology and knowledge. Whereas the real economy is where goods are moved around, its supports and its infrastructure. To put it simply, it is between investments in the physical world and the virtual world,” says Jakobsen in an interview with The Edge Singapore.