Tehran, Iran - World financial markets will dilute the effects of inflationary pressure, all caused by a mix of a devaluation of the U.S. Dollar and higher demand driven by a sharp increase in the price of raw materials. The second wave of this inflationary tsunami will rise from the steady pressure on labor costs and demands for wage increases, especially in the United States were asset price inflation has leaped forward but nominal and real inflation has been kept under the cover of a massive trade deficit. It's all picking up speed in a modern way, but still retains its retro, 1970s character.
As such, risks of consumers spending power in the United States and parts of Western Europe (especially in UK) are bound to be financed with increased levels of private debt. This will be combined with rolling, less visible mini-recessions from one industry to another. Many industries will find it necessary to reinvent themselves, fast.
Can these markets digest higher levels of consumer debt without increases in wages and massive investments in infrastructure?
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