Daniel Lacalle: The Monetary Tsunami Is Coming

Why It Matters

The looming fiscal and monetary strain could trigger higher borrowing costs and market volatility, forcing businesses and investors to reassess financing and risk strategies.

Key Takeaways

• Monetary tsunami ahead, not behind, warns Lacalle looming
• Post‑2022 money supply surge still fuels fiscal pressures
• Developed economies face massive unfunded obligations despite tight rhetoric
• UK and Japan illustrate divergent fiscal paths amid currency strains
• Ongoing deficits signal systemic risk, not a temporary anomaly

Summary

In a recent interview, economist Daniel Lacalle warns that the “monetary tsunami” is not a relic of the pandemic‑era stimulus but an imminent wave that will hit developed economies.

He points out that the explosive money‑supply growth and soaring deficits from 2020‑2022 have left a mountain of unfunded commitments. Even as central banks claim inflation is tamed, sovereign balance sheets remain stretched, and fiscal slack persists.

Lacalle cites the United Kingdom’s political dilemma—choosing between even larger spending or deeper austerity—and Japan’s struggle with a weak yen while keeping fiscal policy stagnant. “The norm is not the exception,” he says, emphasizing that these patterns are systemic.

The analysis suggests that investors and policymakers must prepare for tighter financing conditions, higher borrowing costs, and potential sovereign debt stress, reshaping asset allocation and risk management strategies worldwide.

Original Description

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Daniel Lacalle, Chief Economist at Tressis, warns that the era of excessive money creation and government spending is not behind us — it may still be ahead. Lacalle explains why unfunded obligations, rising deficits, and fiscal pressure across developed economies could keep inflation persistent and continue eroding purchasing power.

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