Hungarian economist János Kornai, who proposed a theory known as the “hoarding tendency,” is among the few economists to have conducted extensive research on the impact of hoarding on economies and businesses.
At present, nations and corporations worldwide appear to be affected by hoarding behaviors, leading to distortions in economic performance and profitability in the second quarter, with signs of a swift recovery.
However, once the adverse effects of hoarding begin to surface, global economic conditions and corporate profits could deteriorate sharply, potentially causing significant disruptions in financial markets.
In fact, some investors have already noticed the distortive effects of hoarding on the economy and businesses. For instance, even though Nvidia posted solid results in the second quarter, its stock price did not experience any upward movement.
This is partly due to ongoing concerns over trade tensions between the United States and China, which may affect Nvidia’s future earnings.
Additionally, there are fears that tech firms – especially those in China – have stockpiled large quantities of Nvidia’s AI chips in the second quarter to circumvent tariffs and sanctions imposed by the Trump administration.
Although this has driven Nvidia’s chip sales to record levels, it could also signify the peak point.
The attempts to evade tariffs and similar policies pose risks to Nvidia’s future profits and have also played a role in the increasing inflation rates in the United States and globally since July. For example, recent inflation data from the United Kingdom and Germany have surpassed market forecasts.
This indicates the slow reversal of the previous stockpiling by businesses seeking to dodge tariffs and alleviate inflationary effects.
As a result, global inflation is expected to increase gradually in the upcoming months, carrying notable consequences for financial market performance around the world.
This price fluctuation and the effects of hoarding on the economy and financial markets were similarly observed in the 1970s, ultimately causing stagflation.
This historical precedent underscores the importance of not underestimating these risks today.
Andrew Wong is a veteran independent commentator
