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BlackRock says we’re all doomed. It’s being optimistic [1]
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Date: 2023-01
The working assumption, for governments and central banks across the world, is that at some point soon everything will get back to ‘normal’ – our economies will return to either pre-pandemic or, sometimes, even pre-2008 crash levels.
These beliefs are reinforced by media economics commentary and across political parties.
But what if they’re wrong? The world’s largest asset manager, overseeing $10trn in assets across the globe, thinks we are, instead, entering a period of increased risk and uncertainty, defined by unavoidable recession and much higher inflation.
BlackRock – a well-connected, influential and hugely profitable pillar of global capitalism – made the predictions in its ‘2023 Global Investment Outlook’ report.
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It states: “The Great Moderation, the four-decade period of largely stable activity and inflation, is behind us.”
Instead, BlackRock forecasts a new regime with a “brutal trade-off” – falling living standards for the many becoming profits for the few.
This reality, of a world undergoing fundamental transformations and disrupting our settled modes of existence, has so far barely entered the economic mainstream.
For BlackRock to break with this consensus might, potentially, be one of the first signs of a broader shift in how major institutions in the Western economies view the world.
Systemic chaos
Annual food inflation in the UK rose to 13.3% – an all-time high – last month, according to trade body the British Retail Consortium, ahead of the official government figures out later this month.
This situation – though slightly worse in the UK due to a flawed Brexit deal and the falling value of the pound (critical as a major food importer) – is common across the globe. Even as wholesale energy prices have dropped from their summer 2022 peak, the price of food everywhere is soaring. United Nations’ forecasts show a major risk of widespread famine in the Global South over the next year, with harvests continuing to underperform.
This global spike in prices over the past 18 months was initially described by the economic establishment as “transitory”. Then, as inflation continued remorselessly upwards, familiar explanations reappeared: notably, excessive worker power (but real wages in the Global North are still falling) and excessive printing of money through quantitative easing (but we’ve been running QE since 2009).
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[1] Url:
https://www.opendemocracy.net/en/oureconomy/blackrock-asset-management-economy-prediction-inflation-recession/
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