Shervin Pishevar says U.S. has managed to export inflation for over a decade

Shervin Pishevar is one of the thought leaders of Silicon Valley finance. Responsible for the creation of dozens of highly valued firms, Shervin Pishevar is the current CEO and founder of Investment company, one of the most important venture capital firms in the world of tech. He has personally founded a number of companies as well, including Social Gaming Network, Ionside and WebOS.

Low levels of inflation have been deceiving

Shervin Pishevar makes the unique argument that the low levels of inflation seen throughout the U.S. economy over the last decade may be masking the true extent of inflation. He says that there have been two mechanisms that have acted as a sort of pressure valve for the enormous inflationary pressures that have been building up as a result of the Fed’s rivers of cheap credit that they have flooded the market with.

The first thing that has happened, Shervin Pishevar says, is that inflation has been exported. This can be seen in the wages of U.S. trading partners, particularly through developing economies like those of China and elsewhere in East and South Asia. This, he says, is approaching its limit. Shervin Pishevar believes that the amount that wages in these countries can continue to rise without severely adversely affecting their competitive advantages is quickly nearing its peak.

At the same time, another place that the inflation has shown up is stateside in most assets. Equities are currently nearing all-time high valuations, with many of the top companies on the Dow Jones trading at P/E ratios above 30. And the real estate market has been run up even above the levels that were seen in the lead up to the 2008 mortgage crisis and subsequent real estate crash.

It is in the area of real estate, in particular, that Pishevar believes that there is no more room to absorb inflationary pressures. He says that many real estate markets in the country’s largest cities are already at such valuations that ordinary workers can hardly afford to rent decent apartments. Pishevar says that this has historically been a harbinger of sharp market corrections.

https://www.caa.com/caaspeakers/shervin-pishevar

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