Central bank easing may no longer be politically acceptable.
That's what Bank of America Merrill Lynch's widely followed chief investment strategist, Michael Hartnett, says in a note.
"Central banks have exacerbated inequality via Wall St. inflation & Main St. deflation; [it's] no longer politically acceptable to stoke [the] Wall St. bubble," the strategist wrote last week.
There are "two ways to cure inequality," make the poor richer or the rich poorer, Hartnett added. The Federal Reserve and the European Central Bank are "now tightening to make Wall St. poorer," likely setting up for a "big top" in stock markets this fall.
US labor participation rate vs. US stocks and bonds
Source: Bank of America Merrill Lynch Global Investment Strategy
Last week, European and U.S. government bond yields climbed to multiweek highs after key policymakers at the European Central Bank, Bank of England and Federal Reserve separately suggested that tighter monetary policy is on the way.
However, all three acknowledged inflation remains subdued.
Normal business growth can no longer create inflation because of the disruptive force of technology, record high global debt, and an aging population, Hartnett said. Instead, he said, inflation will require "radical fiscal stimulus, trade war, major increase in geopolitical risk" and policies to "Occupy Silicon Valley" by redistributing its wealth, reiterating a point he made in May.