Deutsche Bank Announces End of ‘Neoliberalism’ and Forecasts Recession

Deutsche Bank says the good days of neoliberalism and Reagan era economic policy are over, and the worst is yet to come.

“It is no exaggeration to say that we are departing from neoliberalism and that the days of the new-liberal policies that begun in the Reagan era are clearly fading in the rear view mirror,” writes the investment bank in a new paper titled ‘Inflation: The Defining Macro Story of the Decade.’ “The effects of this shift are being compounded by political turmoil in the U.S. and deeply worrying geopolitical risk.”

Deutsche Bank notes that policymakers in the U.S. and Europe are too focused on social issues like combatting climate change, and have lost sight of broader macro economic trends that will inevitably hurt the marginalized populations they claim to help. Inflation will be the greatest challenge of the new economic paradigm, along with “scarcity of workers” from declining working age populations.

“Indeed, history has shown that the social costs of significantly higher inflation and greatly expanded debt servicing obligations make it hard, if not impossible, to reach the social goals that the new US administration (among others) is keen to achieve. We fear that the vulnerable and disadvantaged will be hit first and hardest by mistakes in policy,” says the investment bank.

The rise of inflation coupled with massive stimulus bailouts has created “the most important shift in global macro policy since the Reagan/Volcker axis 40 years ago.” Deutsche Bank warns that “history is not on the side of the Fed” and that “policymakers are about to enter a far more difficult world than they have seen in several decades.”

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