Credit Manager Magazine 9/2021

36 CREDIT MANAGER MAGAZINE WRZESIEŃ / SEPTEMBER 2021 rocketing freight costs and covid-related ex- penditures. This is very unusual for the early stage of recovery when producers normally have excess capacity and new demand leads to higher output without associated prices pressures. Put together excessive demand and supply constraints and you have a situ- ation where a debt-financed policy interven- tionism does not create much higher output but gives a rise to price pressures. Further- more, because the whole stimulus has been financed with debt, central banks are under huge pressure to maintain lower than opti- mal interest rates, affecting capital allocation in a very negative way which in turn is criti- cal for long-term growth. The greater intervention the sharper surge in demand. The question is if this is sustainable. This is not the first time when tools timely used during a crisis are staying with us much longer than required. After the Fed and the Bank of England introduced quantitative easing (aka money printing) in early 2009 it became more a norm than an exception. Withdrawing support measures is always unpopular, especially when negative conse- quences are of the long term nature. Source: Own study, Macrobond Przemysław Kwiecień, PhD, CFA PhD of Economics at the Universi- ty of Warsaw, graduate of London Metropolitan University on a British Council scholarship, licensed Invest- ment Advisor. For years, Chief Eco- nomist of the XTB brokerage house, previously incl. advisor to the Min- ister of Finance. Repeatedly award- ed with the titles of Economist and Analyst of the Year, and also distin- guished as the best forecasting cur- rency rates in Bloomberg’s global rankings. He currently uses BigData methods in his work, both in market analysis and business analysis. Regu- lar guest of television and radio pro- grams on economic issues. “Now the question is what is next? The baseline scenario assumes that the supply side issues will be resolved allowing for output to take advantage of increased demand and helping ease price pressures.” Now the question is what is next? The base- line scenario assumes that the supply side issues will be resolved allowing for output to take advantage of increased demand and helping ease price pressures. The alternative scenario of prolonged supply disruptions means lasting price pressures that will even- tually bite into demand, leading to economic slowdown or in the worst case scenario – to stagflation. The latest economic data suggests that at least the most optimistic scenario is not taking place as disruptions and price pressures build up. We will be lucky to get something in between of those two scenari- os. In any case, this does not look to me as the beginning of the new cycle but the old cycle extended by probably the greatest peacetime policy interventionism on record. EDUCATION