The current economic outlook is torn between official figures and street perception. In a video published on YouTube by financial analyst José Luis Cava, a scenario has been analyzed where the experience of countries with a history of crises, such as Argentina, serves as a mirror for what could happen in European economies.
In Spain, the Executive has implemented measures to mitigate the impact on citizens’ pockets, such as reducing VAT on hydrocarbons or granting direct subsidies.
It is worth remembering that, although inflation in Spain closed last year at 3.1%, the shopping basket and energy have forced the social shield to be extended to contain social unrest in a total context of uncertainty.
Fiscal ‘anesthesia’
From an expert perspective, it is warned that these fiscal interventions run the risk of becoming tools for “vote buying” rather than structural solutions. And, as the advisor assures, there is the thesis that the political class chooses to “anesthetize” the citizen with temporary adjustments to avoid the electoral wear and tear that applying profound reforms would entail.
According to this analysis, the population is treated with a certain paternalism, postponing necessary adjustments that, if applied, would compromise the permanence of any Government in power.
Given this scenario, José Luis Cava maintains that alarmist headlines about runaway inflation could be overstated: “Mistakes are made when it is stated that inflation is 5%; in the United States, SWAP contract markets already discount inflation close to 3% one year ahead.”
Under this premise, it is estimated that the current price increase is temporary, although it is recognized that its impact is especially severe on families with fewer resources.
The protection of heritage
However, the end of inflation does not imply the end of financial problems; but the real challenge is public debt. Even Jerome Powell, chairman of the Federal Reserve (Fed), has openly acknowledged that the growth of debt in the US exceeds the pace of its economy, calling the situation unsustainable.
Faced with inflation caused by lack of supply, central banks admit limitations, focusing their efforts solely on managing consumer expectations.
Faced with this reality of Governments that “buy time” without resolving the underlying issue, the strategy to protect personal savings involves diversification into hard assets. Experts agree on three fundamental pillars to protect assets against monetary degradation:
- S&P 500: Exposure to the strongest companies in the US market.
- Gold: The traditional refuge par excellence in the face of uncertainty.
- Bitcoin: Considered by more and more analysts as a digital reserve asset in the face of the loss of value of traditional currencies.
In short, the recommendation for the Spanish saver is to ignore the media noise and focus on assets that retain their value in the long term, assuming that political solutions tend to be, by nature, short-term.