Shahar Par, the most popular tennis player in Israel, just finished a five-hour long tennis match. In a filmed interview, the camera accompanies her from the tennis court to the gym, where she performs various exercises in about 45 minutes. The interviewer is waiting and is invited to interview her in her room at the hotel where she is staying for the entire tournament. Shahar Far takes out a box of pills and to the interviewer’s question about the meaning of the pills, she answers that she has high cholesterol and must take a daily pill to lower cholesterol.
Five hours of intense, exhausting play and another 45 minutes in the gym, and the girl is treated with pills from the statin family. I am neither a doctor nor the son of a doctor, but from personal experience, when cholesterol levels are high, they leave signs of atherosclerosis in various arteries. When cholesterol is high, and when it also involves genetic reasons, diets and sports will not help even if you run marathons. This is probably where conventional medicine wins and the daily pill will help.
From my experience as a senior manager at Bank Hapoalim during the hyperinflation period in Israel in the 1980s, the remedy involved
Raising interest rates alone without additional administrative measures, the cooperation of the Ministries of Finance and the Histadrut, will not help fight inflation just as diet and activity will not significantly lower cholesterol.
On September 21st was the last increase (for now) by the American Fed by 0.75%, this after five interest rate increases starting from 3/22/16 from 0.25% to 3.25% and its consequences on the rest of the market interest rates accordingly. On October 13, the US Consumer Price Index was published and recorded an increase of 0.4% in the month of September and inflation at an annual level of 8.2%. The American economy reacted quite well to the interest rate hikes, the stock markets were cut by tens of percent, and in the yielding and residential real estate sectors, prices calmed down and transactions partially stopped. The American public reacts to interest rate changes with more attention than the Israelis. “When Americans see clouds, they go to buy a coat and an umbrella,” goes the cliché. Indeed, the reactions also affect the growth rates. A slowdown and recession should produce price reductions and possibly a slowdown in inflation rates. All this may have been true according to economics books in the past.
The latest indices in the US and Europe do not show any moderation. I returned this week from a trip to the beautiful lakes of the North
Italy. The prices in the best restaurants and hotels, the prices of flights, car rentals and other expenses associated with the trip are
Tens of percent higher since the outbreak of the corona virus. I won’t go into the reasons here, the prices are ultimately determined all over the world according to supply and demand and if the prices continue to rise, it means that someone is paying.
The concept of the upper decile, which until the 1990s was relatively narrow, has expanded in the last 30 years to extremely significant dimensions
in most populations in Western economies. The huge amounts of local and foreign tourists I saw on my last visit
In Italy, the full planes and hotels in all ratings prove that there is a huge layer of population in every country
that the price increases did not change anything in their consumption habits. And I didn’t mention the millennial generation that doesn’t give up any restaurant or tourist site near or far regardless of the price.
My conclusion is that it will be very difficult to eradicate inflation and the toolbox of central bank governors is too poor
To treat the inflationary “sclerosis”. I leave the conclusion of what will happen to the capital markets open even though I think things are quite clear.