By Daniel Lacalle
The year of disinflation can only come from a recession. The market expectations of a massive reduction in inflation cannot come from what economists call a soft landing. The reason we have not seen a recession in 2023 is because the global money supply did not fall below $103 trillion and ended almost at the record level of $107 trillion, according to Citi. Furthermore, governments in developed countries have continued to spend as if inflation and rate hikes did not exist. Fiscal policy has been exceedingly aggressive, while monetary policy has been restrictive. As such, the decline in monetary aggregates and the impact of rate hikes have fallen on the shoulders of the private sector.