High oil prices push the inflation bull market

International oil prices and gold prices have continued to rise in the near future, causing import-type inflationary pressures to renew and domestic economic restructuring is imminent. In terms of A-share investment, it means the conversion of an investment concept.

What are the reasons why oil prices and gold prices hit new highs? The decline in the purchasing power of the dollar is the key. As the international reserve currency, the dollar and the gold price correspond to the purchasing power of the dollar. Take the international oil price as an example: In 2008, the highest price was 147 US dollars/barrel, which fell to the lowest level of US$32/barrel in 2009. Subsequently, countries rushed to quantify the quantitative easing. The monetary policy stimulated the price of oil to rise back to US$80/barrel; in October last year, the United States introduced a second quantitative easing policy, which stimulated the price of oil to start a second assault and exceeded the US$100/barrel mark; according to the experience of the 1980s If the United States does not tighten its monetary policy, the probability of the oil price exceeding US$147/barrel is extremely high, which will bring new pressure on domestic inflation regulation. Drawing on the laws of the economic cycle, this inflation must eventually be resolved through economic restructuring.

After the "first wave" of inflation in 2008 was contained by a tightening policy, the prevention of economic downturn used investment means. However, under the current background of restraining housing prices and controlling local government investment and financing platforms, using the old means to stimulate the economy after this “second wave” of inflation will be in an awkward situation. The author believes that the new method that can be used is consumption promotion. Consumption can also bring inflationary by-products. How can we resolve this problem?

Inflation must be contained through tightening policies. There is no doubt about this, but at the same time as the tightening policy, which area should government investment lead in? In the 1980s, when the Reagan administration launched the austerity policy, it launched the “Star Wars” government investment project. In the following 20 years, the transformation of the US economy is closely related to this, and the origin of the Internet stocks is related to it. From the analysis of technological breakthroughs such as manned aviation and five-generation fighter planes, China’s basic technology reserves have already been very rich. Therefore, the re-emergence of tech stocks in the next ten years can be expected. This is both an inevitable result of economic restructuring and a basis for an inflation bull market.