Cents and Sensibility: the Inflation Guy Podcast: Recent Episodes
Michael Ashton - the Inflation Guy
His audiences know him as THE ”Inflation Guy.” In the inflation markets he is known as a pioneer. He is considered as the Expert to the experts in the world of inflation markets where true expertise is hard to find. In this podcast the Inflation Guy talks about the hidden tax, the insidious assault on your wealth, and how to defend your money. Have a question? Get the Inflation Guy app or email InflationGuy@enduringinvestments.com
Is inflation broadening and deepening, or not? And is the apparent broadening and deepening of economic growth causing, or can it cause, more pain on the inflation front? Diffusion indices may not be telling the true story of what is actually diffusing.
Also, a loaf of bread is not a hammer. In case you were curious.
NOTES
Adam Savage: “Every Tool’s a Hammer: Life Is What You Make It.” (https://amzn.to/4ecjFbi)
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (April 2026)” (https://inflationguy.blog/2026/05/12/inflation-guys-cpi-summary-april-2026/)
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The Inflation Guy starts with a general comment on where markets are and what to look for as we contemplate the next move. But the really meaty bit is where he talks about recent Fed research (finally concluding what the Inflation Guy has been telling you for years) about the skewness of the distribution of price changes in the CPI suggesting that maybe there is something more going on than a placid and obedient return to 2%...
NOTES
Is the Inflation Process in Advanced Economies Different After the Pandemic? (https://www.federalreserve.gov/econres/notes/feds-notes/is-the-inflation-process-in-advanced-economies-different-after-the-pandemic-20260330.html)
Skewness warrants caution as Trimmed Mean PCE inflation eases (https://www.dallasfed.org/research/economics/2026/0416)
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (March 2026)” (https://inflationguy.blog/2026/04/10/inflation-guys-cpi-summary-march-2026/)
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Thank you for all the cards and letters. The Inflation Guy dropped in today, to talk about the AI Menace as well as yesterday's CPI report and the near-term trajectory of inflation. This is not a return to a full-time podcasting schedule, but it's at least a positive sign!
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (February 2026)” (https://inflationguy.blog/2026/03/11/inflation-guys-cpi-summary-february-2026/ )
Apollo-sourced chart on New Business Formation: https://inflationguy.blog/wp-content/uploads/2026/03/apollo-newbiz-formation-chart.jpg
Robert J. Shiller: Narrative Economics: How Stories Go Viral and Drive Major Economic Events (https://amzn.to/4lqIXFv)
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It's hard to believe we waited two months for that. The Inflation Guy pulls no punches here. Although he is a serious defender of the Bureau of Labor Statistics' CPI team, he did not mince words in talking about today's report. But it's still data, and the IG tells you what it means.
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (November 2025)” (https://inflationguy.blog/2025/12/18/inflation-guys-cpi-summary-november-2025/ )
Blog on hedonic adjustment “Why Hedonic Adjustment in the CPI Shouldn’t Tick You Off” https://inflationguy.blog/2025/12/10/why-hedonic-adjustment-in-the-cpi-shouldnt-tick-you-off/
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This CPI report is potentially unusual and extra-valuable since there is a chance there won't be a CPI released next month. It's a good thing, then, that the current data was a little softer-than-expected since that helps to lock in Fed eases (although the Fed doesn't really care about the exact level of inflation any more as long as it isn't clearly headed higher). Hear the Inflation Guy break it down this month, and savor it in case the BLS doesn't release the CPI next month!
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (September 2025)” (https://inflationguy.blog/2025/10/24/inflation-guys-cpi-summary-september-2025/ )
Blog on fallback mechanism for CPI: “What Happens if CPI Isn’t Released?” https://inflationguy.blog/2023/09/27/what-happens-if-cpi-isnt-released/
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The Inflation Guy was sorely tempted to title this podcast, "Two Beautiful Women," because he's not above being clickbaity. But he also cannot resist a pun, and that idea won. This episode after all is about AI, and one of the 'leakages' that people don't tend to think about but that is evident in the world at large when you look at how people are using AI. The Inflation Guy explains. He doesn't talk much about inflation in the episode - but if AI is exaggerated, then all of the people who say that AI will solve the inflation problem...are building their house of faith on sand.
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (August 2025)” (https://inflationguy.blog/2025/09/11/inflation-guys-cpi-summary-august-2025/ )
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But not 'Incompetence'! We didn't use the word 'Incompetence' in the title of the episode!
We have to admit, it was tempting. But of all of the examples of incompetence that spring to mind from the last thirty-five years the Inflation Guy has been watching markets and politics and economists, the current examples just don't rank in the top tier. Now, the COVID years...that was some good incompetence there! Not that we are nostalgic for those years.
Anywho, in this episode the Inflation Guy tackles three mostly-unconnected topics. The government shutdown, the question of whether rising GDP growth is inconsistent with weaker employment growth, and the uniqueness (or lack thereof) of current 'attacks' on the 'independence' of the Federal Reserve. Enjoy.
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (August 2025)” (https://inflationguy.blog/2025/09/11/inflation-guys-cpi-summary-august-2025/ )
Blog about “What Happens if CPI Isn’t Released?” (https://inflationguy.blog/2023/09/27/what-happens-if-cpi-isnt-released/ )
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In his role as middle-school cross country coach, the Inflation Guy is fond of reminding runners that they should "get comfortable with being uncomfortable." The same, it seems, is true of inflation! From the lens of median inflation, it has leveled out around 3.6% and there are no real signs and no real math that bring it lots lower any time soon. But more interesting perhaps is how the Fed reaction function has changed. Listen to the Inflation Guy explain why the CPI report should still be important to investors even though it may no longer be very important to policymakers.
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (August 2025)” (https://inflationguy.blog/2025/09/11/inflation-guys-cpi-summary-august-2025/ )
Blog about the Fed’s abandonment of the important part of inflation targeting: “The Fate of FAIT was Fated” (https://inflationguy.blog/2025/09/02/the-fate-of-fait-was-fated/ )
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For the first time in a while, core CPI exceeded expectations. For the first time in a while, core services and core goods both accelerated on a year-over-year basis. But what is not at all new is that median inflation is settling in the high-3% range, roughly 3.65% y/y with today's report. Get used to it! And get used to the Federal Reserve easing anyway...
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (July 2025)” (https://inflationguy.blog/2025/08/12/inflation-guys-cpi-summary-july-2025/ )
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How important is 30% of the CPI? How much should we care about the summary dismissal of the head of the Bureau of Labor Statistics? Is this a sign that the end of government credibility (okay, stop laughing) is nigh?
The Inflation Guy addresses these questions and also muses about the out-of-sync pendulums that are currently swinging in our economy and the effect of these on the overall outcomes.
NOTES
Video of spontaneous synchronization: https://www.youtube.com/watch?v=T58lGKREubo
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (June 2025)” (https://inflationguy.blog/2025/07/15/inflation-guys-cpi-summary-june-2025/ )
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It's time for the monthly CPI report! While the core CPI was another (small) downward surprise, the Inflation Guy in this podcast explains why the internals of the number (and the optics going forward, see Ep. 145) are actually not very good and that there is not at the moment any clear path to get to the Fed's 2% inflation goal. He discusses the policy implications of that - along with the effect of tariffs and of 'mass' deportations.
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (June 2025)” (https://inflationguy.blog/2025/07/15/inflation-guys-cpi-summary-june-2025/ )
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The Inflation Guy does not typically do a CPI preview episode, and this isn't one either. However, he felt it was important to telegraph to investors who aren't actually inflation traders that there are some non-tariff reasons that the CPI is about to re-accelerate for at least the balance of the year. Even though this is known (and priced into inflation swaps), there's every chance that when it happens it will surprise some people and others will attribute to tariffs what should be attributed to simple mathematics. This is a brief but important episode to set expectations for the coming few months.
NOTES
Blog for last month’s CPI: “Inflation Guy’s CPI Summary (May 2025)” (https://inflationguy.blog/2025/06/11/inflation-guys-cpi-summary-may-2025/ )
Ep. 140: White Whale Spotted - Inflation-Linked Cash - the USDi Coin: https://inflationguy.podbean.com/e/ep-140-white-whale-spotted-inflation-linked-cash-the-usdi-coin/
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If this keeps up, we might all long to have the machines take over.
In this episode, the Inflation Guy discusses the victory of a socialist candidate in the New York City mayoral primary this week - and, even if we would like to hope that he has no chance of winning in the general election...he does. Ergo, we should probably think a little bit about what socialism means for inflation.
Really, nothing about socialism is great. And that includes inflation.
NOTES
Monetarium website on Reserve.org: https://reserve.org/monetarium/
“Shortages are Unmeasured Inflation” blog post: https://inflationguy.blog/2021/10/24/shortages-are-unmeasured-inflation/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (May 2025)” (https://inflationguy.blog/2025/06/11/inflation-guys-cpi-summary-may-2025/ )
Ep. 140: White Whale Spotted - Inflation-Linked Cash - the USDi Coin: https://inflationguy.podbean.com/e/ep-140-white-whale-spotted-inflation-linked-cash-the-usdi-coin/
Blog for last month’s CPI: “Inflation Guy’s CPI Summary (April 2025)” (https://inflationguy.blog/2025/05/13/inflation-guys-cpi-summary-april-2025/ )
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Where is the effect of the tariffs? Where is the effect from "Most Favored Nation?" What is going on with this month's CPI report? The Inflation Guy addresses these questions, and more. And on top of that, apologizes! It's a don't-miss episode!
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (May 2025)” (https://inflationguy.blog/2025/06/11/inflation-guys-cpi-summary-may-2025/ )
Ep. 140: White Whale Spotted - Inflation-Linked Cash - the USDi Coin: https://inflationguy.podbean.com/e/ep-140-white-whale-spotted-inflation-linked-cash-the-usdi-coin/
Blog for last month’s CPI: “Inflation Guy’s CPI Summary (April 2025)” (https://inflationguy.blog/2025/05/13/inflation-guys-cpi-summary-april-2025/ )
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Sure, there's no question that screaming about how tariffs are higher than they've been since the Great Depression, or that shelves are going to be empty of product by June, or how "I won't be able to buy my son the GI Joe with the Kung Fu grip", attracts more listeners. But the reality is that the whole tariff hullabaloo is likely overwrought. Certainly, even though tariffs on Canada and Mexico were in place for some time prior to "Liberation Day," we have yet to see any meaningful effect in prices. That isn't to say that it won't happen, only that it hasn't yet. But that doesn't mean there aren't really exciting things happening in the CPI. To hear about the backdrop, and what he's seeing in the numbers, tune in to this episode of the Inflation Guy Podcast!
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (April 2025)” (https://inflationguy.blog/2025/05/13/inflation-guys-cpi-summary-april-2025/ )
Ep. 140: White Whale Spotted - Inflation-Linked Cash - the USDi Coin: https://inflationguy.podbean.com/e/ep-140-white-whale-spotted-inflation-linked-cash-the-usdi-coin/
Blog for last month’s CPI: “Inflation Guy’s CPI Summary (March 2025)” (https://inflationguy.blog/2025/04/10/inflation-guys-cpi-summary-march-2025/ )
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For a while, we are going to be returning periodically to the question of how the economy, markets, and inflation respond to economic policy volatility. In this episode, the Inflation Guy talks about some mildly disturbing signs that manufacturing leadership may not be as adaptable as it once was, and as he had previously assumed. And that's all bad news, both from an economic fragility standpoint (it could mean the garden-variety recession the Inflation Guy has been talking about will be something more like a Hanging Gardens of Babylon-variety recession) and from an inflationary standpoint (fragility on the supply side makes upward thrusts in inflation more normal). Hopefully, his prior assumptions were right and these concerns are misplaced...but they should be considered.
NOTES
“Mass layoffs in trucking and retail coming – Apollo” https://www.freightwaves.com/news/mass-layoffs-in-trucking-and-retail-are-coming-apollo
Texas Manufacturing Outlook Survey (April) https://www.dallasfed.org/research/surveys/tmos/2025/2504
Ep. 140: White Whale Spotted - Inflation-Linked Cash - the USDi Coin: https://inflationguy.podbean.com/e/ep-140-white-whale-spotted-inflation-linked-cash-the-usdi-coin/
Blog for last month’s CPI: “Inflation Guy’s CPI Summary (March 2025)” (https://inflationguy.podbean.com/e/ep-139-this-months-cpi-report-%e2%80%93-uncertainty-reigns/ )
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Today's podcast is a very important one. Coming 298 days after episode 113 (this may be a future trivia answer, but probably not), in this episode the Inflation Guy announces the launch of a project of great importance and significance to those who worry about inflation and are concerned about defending their money.
Please read the important disclaimer below.
NOTES
USDi Partners website: https://usdicoin.com/
Press Release Noting Launch of USDi Coin: https://drive.google.com/drive/u/0/folders/1EJFkc0juTxU2mBEpB4qa6aKIuOUhF_GE
Michael C. Lovell and Robert C. Vogel, “A CPI-Futures Market” (1973) https://www.journals.uchicago.edu/doi/abs/10.1086/260096?journalCode=jpe
Milton Friedman, “Financial Futures Markets and Tabular Standards” (1984) https://www.jstor.org/stable/1830554
William W. Jennings, “Disaggregated TIPS: the case for disaggregating inflation-linked bonds into bonds linked to narrower CPI components Slicing and Dicing TIPS” (2006) https://doi.org/10.1017/S1474747206002551
Ep. 18: Cash is an Option Whose Cost is Inflation https://inflationguy.podbean.com/e/ep-18-cash-is-an-option-whose-cost-is-inflation/
Ep. 32: The Remarkable Story of Inflation Futures https://inflationguy.podbean.com/e/ep-32-the-remarkable-story-of-inflation-futures/
Ep. 56: A New Way to Trade Inflation https://inflationguy.podbean.com/e/ep-56-a-new-way-to-trade-inflation/
Ep. 98: Will You Be Able to Trade Medical Care Inflation Soon? https://inflationguy.podbean.com/e/ep-98-will-you-be-able-to-trade-medical-care-inflation-soon/
Ep. 102: Gold and Crypto - Are Either, or Both, Real? https://inflationguy.podbean.com/e/ep-102-gold-and-crypto-are-either-or-both-real/
Ep. 113: Real-World Crypto Escapades, Concerns, Threats, and Promises https://inflationguy.podbean.com/e/ep-113-real-world-crypto-escapades-concerns-threats-and-promises/
Blog callback: “A Price-Linked USD” https://inflationguy.blog/2024/08/28/a-price-linked-usd/
Blog callback: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Important Disclaimer: The USDi Coin is offered only to accredited investors. Due to various risks and uncertainties, actual events or results or the actual performance of the instrument described herein may differ materially from those discussed here. This information is as of the date indicated, is not complete nor has it been audited, and does not contain certain material information about the products to be offered, including important disclosures and risk factors associated with an investment. Neither Enduring Investments, USDi Partners, nor their principals, employees, agents or authorized representatives, makes any warranty or representation, whether express or implied, or assumes any legal liability for the accuracy, completeness or usefulness of any information disclosed. Past performance is no guarantee of future results.
Blog for last month’s CPI: “Inflation Guy’s CPI Summary (March 2025)” (https://inflationguy.podbean.com/e/ep-139-this-months-cpi-report-%e2%80%93-uncertainty-reigns/ )
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Welcome to CPI Day - this one, in the midst of a head-spinning market turmoil. This moves the CPI report back a little bit in terms of its importance, but the underlying inflation pressures and the effect on prices of tariffs, going forward, are a big part of the reason for the market turmoil.
Uncertainty implies lower prices for risky assets, and we are seeing that. It also has implications for inflation itself, through velocity, and for the hurdle to make policy moves as a central banker. Join the Inflation Guy as he untangles today's CPI report, and a lot of the surrounding noise.
NOTES
Episode callback: “Ep. 137: Drug Prices and the Most-Favored-Nation Clause” https://inflationguy.podbean.com/e/ep-137-drug-prices-and-the-most-favored-nation-clause/
Blog for last month’s CPI: “Inflation Guy’s CPI Summary (February 2025)” (https://inflationguy.blog/2025/03/12/inflation-guys-cpi-summary-february-2025/ )
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Tomorrow, April 2nd, is 'Reciprocal Tariff Day,' when the US will impose tariffs designed to equalize (how well, no one knows) the tariffs faced by foreign imports to the US with the tariffs faced by US exports to other countries. From everything you read, this is going to be a calamity. But the Inflation Guy has a different take, and it comes from an understanding of how manufacturing actually works - with job 1 always being Make Sure the Worst Outcome Doesn't Happen.
Listen to this (unscripted!) episode to hear what he means by this.
NOTES
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (February 2025)” (https://inflationguy.blog/2025/03/12/inflation-guys-cpi-summary-february-2025/ )
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The pricing and distribution of pharmaceuticals is one of the most opaque major pricing systems in the United States. There are oligopolies at the wholesaler level and at the Pharmacy Benefits Manager (PBM) level, which completely control consumer-level pricing. The Inflation Guy explains this system, which has attracted the ire of President Trump in the past since Americans also pay much higher prices for medications than consumers in other countries pay for the same medications; in 2020 President Trump called for a Most-Favored-Nation clause to be applied to drug companies but his first term ended before he could pursue it. Expect the topic to come up again...and this time, you'll understand why it's a great cudgel but doesn't really address the problem!
NOTES
Inflation Guy Blog Post: “Drug Prices and Most-Favored-Nation Clauses: Considerations” https://inflationguy.blog/2020/08/25/drug-prices-and-most-favored-nation-clauses-considerations/
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (February 2025)” (https://inflationguy.blog/2025/03/12/inflation-guys-cpi-summary-february-2025/ )
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It's time for the monthly CPI report, and this one seems apiece with other economic happenings recently: December and January were all over the place, but in February the inflation numbers are settling back down. The problem is, they're settling in at too high a level, and it gets harder and harder to see how we are going to get inflation back to the Fed's target. Not that the Fed really cares very much, and the Inflation Guy explains why that is.
NOTES
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (February 2025)” (https://inflationguy.blog/2025/03/12/inflation-guys-cpi-summary-february-2025/ )
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We are moving too fast, with too many topics! The Inflation Guy hits on four different topics today before running out of time and deferring some until the next episode. Today, (a) Is the 'DOGE Dividend' inflationary? (b) How impactful are 25% tariffs on the price level? (And ironically, taxpayers might actually make money in real terms on the deal). (c) Are we going to get a recession, and what does that even mean these days? (d) Why are implied volatilities so low with policy uncertainties so high?
More next week...
NOTES
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (January 2025)” (https://inflationguy.blog/2025/02/12/inflation-guys-cpi-summary-january-2025/ )
To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/ Now just $29.99/quarter!
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Today the Inflation Guy answers a listener's question, which is 'if the US were ever to have sustained 0% inflation, what would the effects be?' It is a simple question but it leads to some profound thoughts about what price stability is, and what it means...if anything.
Of course, you have to listen to the Inflation Guy's weekly gripe first, but you can fast forward through that part. (It makes him feel good so we leave it in.)
NOTES
Nalebuff and Ayres Book: Why Not?: How to Use Everyday Ingenuity to Solve Problems Big And Small https://amzn.to/4hKssS8
Blog Post on interest rates and inflation: “Enough with Interest Rates Already” https://inflationguy.blog/2023/06/21/enough-with-interest-rates-already/
Blog Post on Corn: “Corn Prices – Has the Correction Run its Course?” https://inflationguy.blog/2022/09/21/corn-prices-has-the-correction-run-its-course/
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (January 2025)” (https://inflationguy.blog/2025/02/12/inflation-guys-cpi-summary-january-2025/ )
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It's the monthly inflation report for January's CPI, and this one was surprising. It would have been alarming, except that we have been through five years of inflation unlike anything we had seen since the 1980s. So, we're jaded. The Inflation Guy walks through today's report and considers wildfires, tariffs, and most-favored-nation status. A tour de force!
NOTES
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (January 2025)” (https://inflationguy.blog/2025/02/12/inflation-guys-cpi-summary-january-2025/ )
Blog on "Drug Prices and Most-Favored-Nation Clauses: Considerations" from August 2020 https://inflationguy.blog/2020/08/25/drug-prices-and-most-favored-nation-clauses-considerations/
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Today's episode is somewhat shorter than the norm, since last week's episode was a little longer than the norm. Today, the Inflation Guy notes that M2 money velocity declined very slightly in Q4, and points out a weird - but possibly important - effect that could have the perverse effect of dampening inflation slightly. (To be sure, the Inflation Guy thinks there are other, larger forces at play but this is an interesting one that is worth highlighting in case it continues!)
NOTES
Prior Podcasts from the IG on Velocity:
- Ep. 10: A High-Velocity Tour of Velocity (https://inflationguy.podbean.com/e/ep-10-a-high-velocity-tour-of-velocity/ )
- Ep. 34: Velocity Turns Higher...Whoops! (https://inflationguy.podbean.com/e/velocity-turns-higherwhoops/ )
- Ep. 50: What the Money Velocity Comeback Means for Inflation, and Investors (https://inflationguy.podbean.com/e/ep-50-what-the-money-velocity-comeback-means-for-inflation-and-investors/)
- Ep. 108: Revisiting Velocity - Myths and Reality (https://inflationguy.podbean.com/e/ep-108-revisiting-velocity-myths-and-reality/ )
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (December 2024)” (https://inflationguy.blog/2025/01/15/inflation-guys-cpi-summary-december-2024/ )
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It seems every day these days we hear about another tariff being applied to a trading partner of the U.S. (or, more usually, being threatened). The usual media reaction to these threats are something along the lines of saying "Oh my sainted aunt. This sort of talk gives me the vapors" because it is so, so, so bad. Tariffs are archaic shibboleths that no truly modern economist would ever support.
Come to think of it, that sounds like the archaic notion that money causes inflation. But we digress.
The Inflation Guy in today's episode discussed three things about tariffs that you might have thought you knew...and certainly everyone else seems to think they know...but which don't really work that way in the real world.
NOTES
Yesterday’s Inflation Guy blog on this topic: “Trump Tactical Targeted Tariffs: A Reminder of the Impact of Tariffs” https://inflationguy.blog/2025/01/29/trump-tactical-targeted-tariffs-a-reminder-of-the-impact-of-tariffs/
Ashton, Michael, The Efficient Tariff: Systematically Balancing Security and Welfare Concerns (March 1, 1992). The American Economist, Vol 36, No 1, 1992, pp 44-52. , Available at SSRN: https://ssrn.com/abstract=2915287
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (December 2024)” (https://inflationguy.blog/2025/01/15/inflation-guys-cpi-summary-december-2024/ )
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Today the Inflation Guy answers a reader question. What are the long-term effects of having 4% inflation compared with 2% inflation? Does that small increase in the inflation rate have any important ramifications?
Hooo yeah you betcha it does. The Inflation Guy goes through a number of them, and feels like he probably left some out in the process.
Along the way, he also had some choice remarks about why the Federal Reserve next week and over the next few months, even though it has no economic reason to cut rates, may well still do so. Find out why.
NOTES
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (December 2024)” (https://inflationguy.blog/2025/01/15/inflation-guys-cpi-summary-december-2024/ )
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Let's face it: there is nothing more exciting than the monthly consumer inflation report. Don't we all agree on that? Is there any day that we collectively brace the day with such enthusiasm as the day the CPI report comes out? Surely not.
However, this month...the December CPI...just isn't the story. The Inflation Guy today dutifully addresses the data, but more importantly focuses on how the data is surely going to be different going forward due to many, many causes for inflection that are operating right now. This will change data, markets, and narratives. The IG guides you through it all!
NOTES
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (December 2024)” (https://inflationguy.blog/2025/01/15/inflation-guys-cpi-summary-december-2024/ )
Ep. 127: The Point of Inflation Inflection (https://inflationguy.podbean.com/e/ep-127-the-point-of-inflation-inflection/ )
Website for California Wildfire official tracking (https://www.fire.ca.gov/incidents )
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It's 2025, and the Inflation Guy - like inflation itself, actually - is not yet dead. After a one-month hiatus, he kicks off the new year with a quick review of the current state of affairs and then addresses the question of whether the catastrophic California wildfires will help push inflation higher. It isn't as if that is the most-important thing to think about, when it comes to those fires - but it is worth thinking about all of the implications of large-scale disasters.
ERRATUM- IG refers to Bullard. Brain freeze. He meant Waller, a current member of the Board of Governors at the Fed.
NOTES
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (November 2024)” (https://inflationguy.blog/2024/12/11/inflation-guys-cpi-summary-november-2024/ )
Last 2024 Podcast “Ep. 127: The Point of Inflation Inflection” (https://inflationguy.podbean.com/e/ep-127-the-point-of-inflation-inflection/ )
Old Blog: “Some Effects on Inflation from Harvey and Irma” (from 2017) (https://inflationguy.blog/2017/09/11/some-effects-on-inflation-from-harvey-and-irma/ )
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For more than a year now, the story about inflation and why inflation was almost certainly going to stay high (in the 'high 3s, low 4s' on median inflation, as the Inflation Guy has long held) was a story about the guaranteed rebound in money velocity. That has been an easy story and forecasting medium-term inflation has been consequently pretty easy.
That is changing.
Velocity has made a round trip to where it was prior to COVID. And that means that the underlying drivers of inflation going forward are changing. In this episode, the Inflation Guy explains what that means for the future of inflation.
NOTES
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (October 2024)” (https://inflationguy.blog/2024/11/13/inflation-guys-cpi-summary-october-2024/ )
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This is one of the rare podcast episodes that you might consider listening to at 75% speed instead of 125%. Because the Inflation Guy is feeling feisty, and when he feels feisty he talks fast. And he's feisty because today (why today, of all days? No one knows) he is especially triggered by the bad economics going around that suggests that mass layoffs of Federal employees would be recessionary and very painful. Au contraire, says the Inflation Guy (or he would say that, were he French) - firing Federal workers is a positive supply shock.
Listen, and find out in what way laying off Federal workers is like mass deportations of illegal immigrants.
NOTES
Goodhart, Charles and Manoj Pradhan, The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival (Product link: https://amzn.to/493QbJK )
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (October 2024)” (https://inflationguy.blog/2024/11/13/inflation-guys-cpi-summary-october-2024/ )
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Well, it was always a risk for the Fed to start their rate-cutting path with a highly-unusual 50bps cut, while inflation was still high. But after today's CPI report, that unusual (some would say suspiciously political-looking) move puts the Fed in a difficult bind. In this episode, the Inflation Guy talks about the CPI report and explains how the Fed-Congress quid-pro-quo that has existed for decades now puts the FOMC in a sticky situation.
NOTES
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
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Contrary to a lot of expectations, we already seem to know the basic shape of American government going forward, with Donald Trump as President with a Republican Senate and (likely) a marginally Republican House. In this podcast episode, the Inflation Guy addresses the initial market moves, which he characterizes as the "Trump caricature" response, and explains which of these moves make sense, and which are likely senseless knee-jerk reactions to cartoonish representations of Trump's likely priorities come January 20th.
NOTES
Ashton, Michael, The Efficient Tariff: Systematically Balancing Security and Welfare Concerns (March 1, 1992). The American Economist, Vol 36, No 1, 1992, pp 44-52. , Available at SSRN: https://ssrn.com/abstract=2915287
Blog post on sizing positions when volatility changes: “Kicking Tails” (Feb 2018) https://inflationguy.blog/2018/02/12/kicking-tails/
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (September 2024)” (https://inflationguy.blog/2024/10/10/inflation-guys-cpi-summary-september-2024/ )
Very important blog post: “What Makes a Stable Coin Stable?” https://inflationguy.blog/2024/10/31/what-makes-a-stable-coin-stable/
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One of the perils of being an analyst (although the Inflation Guy happens to be an investor and trader, and only coincidentally an analyst) is that behavioral biases tend to make us exaggerate the importance of any small collection of data. This appears to be what happened in the summer, when a couple of low CPI prints persuaded the Federal Reserve that the inflation battle was essentially won and it could turn its attention to the developing weakness in the economy.
Peek-a-boo! Over the last couple of months, inflation has come back to just about exactly where it was before the dip during the summer, raising at least the tickle of a question about whether the Fed's 50bps interest rate cut recently could constitute a policy error. In this episode, the Inflation Guy breaks down the data and opines on this topic.
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (September 2024)” (https://inflationguy.blog/2024/10/10/inflation-guys-cpi-summary-september-2024/)
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The Inflation Guy Podcast welcomes a special guest this week: Chris Clothier, co-CIO of UK asset manager CG Asset Management. Together, Chris and the Inflation Guy discuss how they think about inflation-linked bonds in the context of a portfolio: how to think about their return; different aspects of their risk; and what role/benefit they play in the construction of an 'all-weather' portfolio.
Please welcome Chris Clothier to the podcast!
NOTES
David Hackett Fischer, The Great Wave: Price Revolutions and the Rhythm of History. (https://www.amazon.com/Great-Wave-Revolutions-Rhythm-History/dp/019512121X )
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (August 2024)” (https://inflationguy.blog/2024/09/11/inflation-guys-cpi-summary-august-2024/ )
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A rogue's gallery of inflation hucksters have made lots of money over the years by preying on the sense that the average consumer/investor has that "my inflation is higher than the CPI," with some spin usually on how the gov'mint is intentionally understating inflation for some nefarious reason. These hucksters take advantage of the fact that, for reasons that are so native to the economic system that Daniel Kahneman won a Nobel Prize for describing them, consumers perceptions are not just biased, but biased in systematic ways - which, in the case of inflation, always tends to increase the perceived level of inflation.
In this episode of Cents and Sensibility, the Inflation Guy explains how these biases operate on our sense of inflation. If you too want to sound erudite at your next cocktail party - "Actually, Muffy, inflation just seems like it's 10% because..." - then this is a must-listen episode. If not, then you're also probably invited to more cocktail parties than the Inflation Guy is.
NOTES
Ashton, Michael, “Real-Feel” Inflation: Quantitative Estimation of Inflation Perceptions, Business Economics, Volume 47, pages 14–26, (2012) (https://link.springer.com/article/10.1057/be.2011.35 )
Blog callback: Eighth Grade Math vs Shadowstats (https://inflationguy.blog/2021/05/25/eighth-grade-math-vs-shadowstats/ )
Podcast callback: Ep. 72: Chapwood Index vs CPI – Which is the Better Inflation Index? (https://inflationguy.podbean.com/e/ep-72-chapwood-index-vs-cpi-%e2%80%93-which-is-the-better-inflation-index/ )
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (August 2024)” (https://inflationguy.blog/2024/09/11/inflation-guys-cpi-summary-august-2024/ )
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It's that time again, time for the CPI report, and the Inflation Guy tackles it with his usual enthusiasm. Now, some people think when they hear from a guy called "The Inflation Guy" that everything is going to be about how inflation is higher than you think, and you should buy gold gold gold gold or bitcoin bitcoin bitcoin. But you don't get to be The Inflation Guy(tm) by systematically being wrong half the time. In this episode, the IG explains how this report isn't as bad as it looks, and most importantly should not change the Fed's decision about whether to cut rates by 25bps or 50bps next week. Listen to find out why!
NOTES
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (August 2024)” (https://inflationguy.blog/2024/09/11/inflation-guys-cpi-summary-august-2024/ )
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The August vacation time is over, and we now hurtle into the unknown last third of the year. The Inflation Guy starts this journey by clearing his desk of the small inflation stories that are interesting and worth discussing, but don't by themselves warrant a full episode. He discusses power, supply chains, price-linked currencies, Japan's experience with trying to get more inflation, and sticky renters. Enjoy, and find all of the links to the source articles below!
NOTES
Blog Post: “A Price-Linked USD” (https://inflationguy.blog/2024/08/28/a-price-linked-usd/ )
WSJ Article: “Pay Your Rent, Get 2% Cash Back: Landlords Join Craze for Rewards” (https://www.wsj.com/real-estate/pay-your-rent-get-2-cash-back-landlords-join-craze-for-rewards-8bf68ee3)
Utility Dive: “PJM capacity prices hit record highs, sending build signal to generators” (https://www.utilitydive.com/news/pjm-interconnection-capacity-auction-vistra-constellation/722872/ )
Reuters: “US importers balk at return of $10,000 container shipping rate” (https://www.reuters.com/business/us-importers-balk-return-10000-container-shipping-rate-2024-07-15/ )
NY Times “Japan Wanted Higher Inflation. It’s Here, and It Hurts.” (https://www.nytimes.com/2024/07/29/business/japan-inflation-rates.html )
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (July 2024)” (https://inflationguy.blog/2024/08/14/inflation-guys-cpi-summary-july-2024/ )
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It's time for another CPI Report analysis, and the Inflation Guy wades through the confusing report to conclude that...it's not quite as good as it looks. In Episode 106, he talked about a "Potential Pony Situation." Is this a reverse pony situation?
What the heck does that even mean? Who writes this stuff?
NOTES
Podcast Callback: “Ep. 106: This Month's CPI Report - A Potential Pony Situation” (https://inflationguy.podbean.com/e/ep-106-this-months-cpi-report-a-potential-pony-situation/ )
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (July 2024)” (https://inflationguy.blog/2024/08/14/inflation-guys-cpi-summary-july-2024/ )
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In this episode of Cents and Sensibility, the Inflation Guy begins by addressing the recent stock market sell-off and tells you what is really causing it. Hint: he told you in Episode 116 it was going to happen. And: if we are actually headed into a recession and possibly a bear market, what does that mean for inflation? Keep your eyes on the macro, not the micro. The Inflation Guy tells you what that means.
NOTES
Podcast Callback: “Ep. 116: Political Volatility” (https://inflationguy.podbean.com/e/ep-116-political-volatility/ )
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (June 2024)” (https://inflationguy.blog/2024/07/11/inflation-guys-cpi-summary-june-2024/ )
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Perhaps a little less coffee would be in order. The Inflation Guy in this episode wanders through several topics, including the Biden Administration's proposal for national rent control, the eviction moratorium, different measures of rent inflation, market volatility and where to hide for the next 110 days until the US election. Focus, man, focus. Still, he has useful contributions on these topics! Listen and see.
NOTES
Podcast Callback: “Ep. 37: Bad Idea of the Year - Wage and Price Controls” (https://inflationguy.podbean.com/e/ep-37-bad-idea-of-the-year-wage-and-price-controls/ )
Podcast Callback: “Ep. 7: Rents and Sensibility” (https://inflationguy.podbean.com/e/ep-7-rents-and-sensibility/ )
Podcast Callback: “Ep. 74: Inflation Folk Remedies” (https://inflationguy.podbean.com/e/ep74-inflation-folk-remedies/ ) (This is the one the IG mentioned where he discusses ATRR and NTRR).
Blog Post: “The Residual Effect on Rent Inflation of the Eviction Moratorium” (https://inflationguy.blog/2024/07/18/the-residual-effect-on-rent-inflation-of-the-eviction-moratorium/ )
Blog for this month’s CPI: “Inflation Guy’s CPI Summary (June 2024)” (https://inflationguy.blog/2024/07/11/inflation-guys-cpi-summary-june-2024/ )
Important article: “The Inflation Management Opportunities In The Insurance Industry Today”
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It's that time again, and even though the punditry is now fixated more on the Unemployment Report than the inflation reports, the Inflation Guy doesn't have the trademark or the expertise to be The Unemployment Guy so this podcast is sticking to its knitting. This month's CPI report was the best we have seen in some time, and largely for the right reasons. Are there still things that need to happen for us to be safely on the road to low-and-stable inflation? Yes indeed - and the Inflation Guy discusses those things in this episode.
NOTES
Blog for this month’s CPI: Inflation Guy’s CPI Summary (June 2024)
Important article: “The Inflation Management Opportunities In The Insurance Industry Today”
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One of the absolute rock-solid articles of faith in the economics community is the proposition that increasing interest rates causes inflation to decline. If you want to slow inflation by a lot, you need to increase interest rates a lot. There is no question that increasing interest rates slows economic growth, and hurts people by doing so. The only reason to do it is because economists believe strongly that it brings down inflation.
But what if it doesn't? In this podcast, the Inflation Guy argues that neither logic nor empirical observations support the notion that increasing interest rates - especially in the absence of restricted money growth - causes inflation to decline. And the basic reason that this relationship is indeterminate is easy to understand. The IG explains.
NOTES
Last Week’s Great Podcast! Ep. 113: Real-World Crypto Escapades, Concerns, Threats, and Promises
Chart of Interest Rates vs Inflation: https://bit.ly/4eJTZly
Blog for this month’s CPI: Inflation Guy’s CPI Summary (May 2024)
Important article: “The Inflation Management Opportunities In The Insurance Industry Today”
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On this episode of Cents and Sensibility, the Inflation Guy is blessed with not one but two outstanding guests, who help him unravel the significance of a recent client's problem: after selling his bitcoin on an exchange, the exchange made it difficult (so far, impossible) to transfer the proceeds back to his bank. As the Inflation Guy notes, "that's not in the marketing literature about crypto." So, he enlisted some experts to help explain what is going on, and what it means.
Andy Fately, last heard from in Episode 66 of this podcast, is a veteran of more than 40 years in the foreign exchange markets, trading spot, forwards and options as well as running businesses for major US and international commercial and investment banks. He is known as the FX Poet (https://fxpoetry.com/about-2/), but really focused on creating solutions for risk managers for problems as they arise.
Susan Joseph, new to the program, is the Executive Director of FinTech at Cornell, and also engages as Fractional GC and Consultant, advising on crypto and digital assets strategy and its interaction with the regulatory world with a focus on the technical and legal interactions. Susan also educates through continuing legal education classes on blockchain, crypto, digital assets, and AI at Cornell, MIT, Stanford, PLI, and ABA and is a recognized expert. She has served as Secretary for both insurer and fintech boards, is an Advisor to certain crypto and other startups, and is the pro bono Executive Director of Diversity in Blockchain, a 501(c)(3) that supports inclusion.
NOTES
FX Poet: https://fxpoetry.com/about-2/
Article “Central Bank Digital Currencies: Some Considerations,” by Andrew Fately and Susan Joseph, on Tabb Forum (free registration).
Article “How CBDC’s May Impact Inflation,” by Michael Ashton, Andrew Fately, and Susan Joseph, on Tabb Forum (free registration).
Article “Dirty Laundry” on DW Birch Substack
Blog for this month’s CPI: Inflation Guy’s CPI Summary (May 2024)
Important article: “The Inflation Management Opportunities In The Insurance Industry Today”
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This month's CPI was a good number - happy news!
But if the Inflation Guy was going to design a 'good number' from scratch, he wouldn't make it look like this. He would start at the other end. What does that mean? Take a listen, and find out why this is a good report and a 'goods' report, but maybe not a great report.
NOTES
Blog for this month’s CPI: Inflation Guy’s CPI Summary (May 2024)
Important article: “The Inflation Management Opportunities In The Insurance Industry Today”
To Subscribe to Quarterly Inflation Outlook: https://inflationguy.blog/shop/
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At the 2023 Fed conference at Jackson Hole, Chairman Powell promised that the Fed would keep fighting inflation "until the job is done." Is the job done? The Inflation Guy thinks the signs suggest inflation is converging on a higher level than the Fed desires. Will the Fed really keep after it? Listen and find out what the Inflation Guy thinks.
NOTES
Pod Callback: Ep. 109: Famous Last Words
Powell snippet: Source Bloomberg TV
Odd reference: Wikipedia on Mummenschanz
Blog for this month’s CPI: Inflation Guy’s CPI Summary (April 2024)
Important article: “The Inflation Management Opportunities In The Insurance Industry Today”
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The economists were mostly on-target with today's CPI report, at least with the headline and core figures. But that doesn't mean that there was nothing going on underneath the surface. Below the big headlines, some things are getting better and some things...aren't. What does it all mean, and does the Fed have some cover to cut rates? Listen to this episode to hear the Inflation Guy's take on those questions!
NOTES
Blog for this month’s CPI: Inflation Guy’s CPI Summary (April 2024)
Important article: “The Inflation Management Opportunities In The Insurance Industry Today”
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"They couldn't hit an elephant at this distance!"
- General John Sedgewick, Union, US Civil War, moments before he was struck by a bullet in the eye.
The tradition of 'famous last words' is alive and well, especially at the Federal Reserve and Treasury. From Bernanke saying the subprime crisis would be contained, to Yellen and Powell describing inflation as 'transitory,' and far beyond - the track record of overly-confident predictions that ultimately turn out to be hilariously wrong is alive and well. In this episode, the Inflation Guy discusses the most-recent candidate, from last week...
NOTES
Blog Callback: “You Cannot Inflate the Debt Away”
Important article: “The Inflation Management Opportunities In The Insurance Industry Today”
Blog for last month’s CPI: Inflation Guy’s CPI Summary (March 2024)
Interesting Interactive CPI Chart the IG Didn't Even Mention But is Worth Looking At
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There are several pernicious myths about the velocity of money that seem to never die. "Friedman said velocity is stable." "Velocity is just a plug number, so it is random." "Velocity is permanently impaired and only declines over time." These drive the Inflation Guy bananas, and from time to time he feels the need to talk about velocity. In this episode, the IG describes the main inputs into his model of velocity, and what the model currently implies about the future path of velocity from here. And, to be fair, he also kvetches some, and that's unseemly. We apologize for him.
NOTES
Blog Callback: “Enough With Interest Rates Already”
Podcast Callback: “Ep. 50: What the Money Velocity Comeback Means for Inflation, and Investors”
Important article: “The Inflation Management Opportunities In The Insurance Industry Today”
Blog for this month’s CPI: Inflation Guy’s CPI Summary (March 2024)
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We don't know if the origin of the 'ten most dangerous words in the English language' was Ronald Reagan, or if the story predates him. But those words, "I'm from the government, and I'm here to help you," are the theme to today's podcast. The Inflation Guy interprets some recent news stories, but ties it all together with a crucial observation about what happens if the 'scarce resource' in a particular economy turns out to not be 'labor.'
NOTES
Dan Bongino Show from April 18 (https://megaphone.link/WWO9433765103 ). Listen from the 47 minute mark.
Forbes “Medical Analysis by Milton Friedman” (2009)
Washington Post “Biden administration to cap rent increases for some affordable housing units”
Blog Callback: “Inflation and Insurance Companies, with Bill Poutsiaka”
Important article: “The Inflation Management Opportunities In The Insurance Industry Today”
Blog for this month’s CPI: Inflation Guy’s CPI Summary (March 2024)
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On this month's CPI report, the Inflation Guy addresses yet another high-side surprise and discusses the details, along with how this fits into the continuing narrative. Curious about how this concerns ponies? You'll have to listen to the episode!
NOTES
Blog for this month’s CPI: Inflation Guy’s CPI Summary (March 2024)
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Okay, buckle up because the Inflation Guy here is going to cover some big-time concepts. Wayyyy back in 2003, some guys named Jarrow and Yildirim explained how inflation acts just like foreign exchange, except not foreign and not on an exchange. No, no, stay with me here. Turns out they were right, and a lot of what is happening today - and the mistakes in interpretation that are being made - can be understood if you understand that the 'inflation FX market' has just changed in important ways. This is an important episode!
NOTES
Jarrow R, Yildirim Y (2003) Pricing treasury inflation protected securities and related derivatives using an HJM model. Journal of Financial and Quantitative Analysis 38(2):337–359. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=585828
Unidad de Fomento (Wikipedia entry): https://en.wikipedia.org/wiki/Unidad_de_Fomento
Chart: Nominal and inflation-adjusted Case-Shiller 10-City index, normalized to end of 2019
Chart: Nominal and Real S&P 500 Earnings, normalized to end of 2019
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Every once in a while, it is a good rigor to take all of those sticky notes that festoon your desk and put them into one, organized, document. At least, that's what the Inflation Guy tells himself. On the other hand, they say 'a clean desk means someone else is in charge.' Still, it was getting to be a fire hazard.
In this episode, the Inflation Guy tackles a few disparate stories and recent trends that seem to have an overarching theme: the general disinflationary trend we have been enjoying for the last year is starting to have some defectors.
NOTES
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Another month, another above-consensus CPI print. The Inflation Guy tears into the data like a feral cat, ripping away the fatty bits to get at the meaty part. Okay, maybe that was too graphic. Anyway, this cat points to several signs in this month's inflation report that inflation is starting to get 'sticky' at a higher level than we'd like it to, and the recent inflation deceleration is going to get more difficult going forward. What is the implication for Fed policy?
NOTES
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Both gold and crypto are occasionally put forth by promoters as having inflation-hedging qualities. Which of these has a better claim? Or are they both 'real assets' that can help you defend your money?
Now that mutual funds and ETFs are launching seemingly weekly to hold BTC and other forms of crypto, 'democratizing access' to this 'asset class,' it is worth asking whether these funds are securities that should be included in every investor's toolkit.
Listen to this episode before you take the plunge. In it, the Inflation Guy makes a very clear prediction about what is to come.
NOTES
Podcast callback: Ep. 86: If Gold is Like TIPS, Should I Buy it?
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This somewhat longer episode has a little bit of potpourri at the beginning, as the Inflation Guy covers the OER-Primary Rents divergence, the decline of Reverse RP balances, and the effect of AI on inflation...but the meat of the podcast is a discussion about a product (which a listener sent to the Inflation Guy) that resembles an inflation-linked annuity but in a mutual fund form. There are pros and cons to the product, and the IG covers them all before giving it a cautious thumbs up.
The Inflation Guy is pleased that we are starting to see more and more innovative products, even if there are still plenty of frontiers as yet unexplored. So he continues to boldly go where no inflation guy has gone before!
NOTES
Podcast callback: Ep. 54: Will Artificial Intelligence Kill Inflation?
Blog Post: AI: Even a Big Deal is Smaller Than You Think
Company reference: Stone Ridge Asset Management (Lifex Funds)
Google Sheet with Speculative Subcomponent Inflation Swaps: https://docs.google.com/spreadsheets/d/118FRJVhjGTLoRr1ebqfZn7opTlavtmt8XuyAQHicx5I/edit#gid=0
Blog Post: Inflation Sherpa
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When your grandpa turns 100, you're going to hear stories. It just goes with the territory. When a podcast has its 100th episode, same deal.
Grandpa Inflation Guy actually manages to keep the stories to a minimum, while reporting on a recent conversation he has had about a development in the health care inflation space and giving some optimistic readings about the future to the gathered listeners.
Now for some cake!
NOTES
Podcast callback: Ep. 98: Will You Be Able to Trade Medical Care Inflation Soon?
Podcast callback: Ep. 97: Inflation and Reinsurance - a Better Way
Google Sheet with Speculative Subcomponent Inflation Swaps: https://docs.google.com/spreadsheets/d/118FRJVhjGTLoRr1ebqfZn7opTlavtmt8XuyAQHicx5I/edit#gid=0
Blog Post: Inflation Sherpa
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Welllll...so much for the idea that, since the 3-month average of CPI was down at 1.90%, the Fed could ease in March! This month's inflation print was, to use a technical term, broadly icky. The Inflation Guy tells you why.
NOTES
Podcast callback: Ep. 98: Will You Be Able to Trade Medical Care Inflation Soon?
Blog Post: Inflation Guy’s CPI Summary (Jan 2024)
Blog Post: Inflation Sherpa
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The Inflation Guy for a long time has had a "bee in his bonnet" (seriously, who uses this phrase? Or owns a bonnet?) about the need for more tools to trade inflation and, especially, subcomponents of inflation like medical care. In this episode, after giving a quick preview of next week's CPI report he turns to a discussion of IMX, a new futures exchange that has expressed an intention to trade instruments related to medical care. At the end of January, the IMX announced its first futures contract. Does it get the ball rolling towards being able to trade medical care inflation? Listen to find out the Inflation Guy's take.
NOTES
Podcast callback: Ep. 32: The Remarkable Story of Inflation Futures
Article: For ‘Inflation Guy’ (and Shiller), Medical TIPS Are ‘Holy Grail’
Exhibit: SEC Filing for MacroMarkets Medical Care security
Website: IMX Health
Exhibit: CFTC filing announcing listing of Healthcare Index Futures
Blog Post: Inflation Sherpa
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The Inflation Guy sometimes gets distracted by shiny things. Today, he was distracted by an article sent from a listener, detailing comments from the CFO of Travelers Insurance about the increased reinsurance the company is employing as a hedge against inflation risks to its property and casualty (P&C) businesses.
This is an illuminating comment, showing both that (a) insurance costs are going up not just because insured property values are rising, but also because the cost of reinsuring is rising as inflation risks rise; and (b) major insurance companies are still not hedging inflation risk in P&C businesses with inflation hedges but rather through increasing reinsurance coverage. That's inefficient, and the Inflation Guy explains why.
Insurance and inflation! What could be more interesting than combining those two exciting topics?
NOTES
Article: Inflation on insured values main reason for Travelers extra reinsurance protection, says CFO
Blog Post: Inflation Sherpa
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"Money Illusion" sounds like the sort of thing your economics teacher droned on and on about, causing you to yearn for a nice nap during class. But is it a real thing? And if it is...why does it matter?
In this episode, the Inflation Guy explains money illusion, presenting some of the evidence that it is (at least some of the time) a real phenomenon. He uses current observations where you can see money illusion at work, and then explains why it is very important that policymakers understand how important money illusion is, and over what time scales.
NOTES
Article: Fox News New Hampshire Voter Analysis Poll
Article: AP Poll from October
Blog Post: Shortages Are Unmeasured Inflation
Blog Post: Inflation Sherpa
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In this (longer than normal) episode, the Inflation Guy talks about the outlook for inflation - which, admittedly, he did last week with the CPI Summary episode but in this case he delves into more of the drivers of his 2024 and 2025 expectations - and for several asset markets. He frames the question as a balance of the risks and makes concrete suggestions for how he would tilt portfolios today.
Also, in response to listener requests, he lists several podcasts that he (very occasionally) listens to. "Recommend" is a strong word, but he likes these.
NOTES
Blog Post: 2024 Balance of Risks
Blog Post: Inflation Sherpa
Chart of Mortgage Origination vs Money Growth
Podcasts Referred to: Orion's The Weighing Machine, InsuranceAUM podcast, We Study Billionaires, Grant Williams Podcast, Demetri Kofinas Hidden Forces, What the Truck?!?, The Memo by Howard Marks, Fill the Gap.
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It's 2024, a fresh start to what is surely going to prove to be a golden year and the end to history! The SEC has approved bitcoin ETFs, the Fed is dovish and achieved a perfect landing, rates have come down a ton, and everything is beautiful.
At least, as long as inflation really does collapse immediately to 2%, as the consensus seems to suggest. Unfortunately, reality has a way of intruding in these sweet dreams and today's CPI report was frothy in some uncomfortable ways - not little one-offs, but big things like rents, and the stuff driven by wages. Listen to the Inflation Guy walk through the implications of today's number, and what it probably means for Fed policy and markets.
NOTES
Podcast Callback: Ep. 74: Inflation Folk Remedies
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It's the monthly CPI report! In this podcast, the Inflation Guy discusses today's economic data and highlights why the market's expectations for substantial easing in 2024 sets up a difficult path forward. He discusses several ways that inflation could get back to target, and then what needs to happen with policy to make that happen.
Hint: it isn't what the market is pricing right now.
NOTES
Blog Callback: Beware the Price Controller
Podcast Callback: Ep. 74: Inflation Folk Remediesv (discussing among other things the ‘new’ rental indices that supposedly imply rents deflation in the CPI)
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The notion of a 'safe withdrawal rate,' being a real amount that can be taken out of savings in retirement each year without a significant risk of running out of money in some window of time, goes back to a 1994 paper by Bengen which enshrined the "4-percent rule." In this podcast, the Inflation Guy discusses improvements to that rule - including some that he popularized - especially when it comes to the need to add some inflation-proofing to an asset mix that needs to keep up with inflation! The IG still prefers personal liability-driven-investing, but investment do-it-yourselfers who like rules of thumb need to know that there are easy ways to improve on the 4% rule...and some not-so-obvious pitfalls in using it blindly!
The Inflation Guy also responds to an excellent listener email about last week's episode.
NOTES
Podcast callback: Ep. 91: Quality Adjustment (?) in College Tuition Inflation
The Inflation Guy's Society of Actuaries paper: Maximizing Personal Surplus: Liability-Driven Investment for Individuals
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In this episode, the Inflation Guy considers the question of why college tuition inflation has consistently run drastically faster than headline inflation. Is it a productivity question, or a quality question? And what does 'quality' mean in the context of college education? There are a lot of complex issues to be considered here, which ordinarily would mean you shouldn't ask someone who does his best thinking in the shower, but because we are talking about inflation we are right in his wheelhouse. It's an interesting thought process, which brings up parallels to medical care, rides at Disney, and fins on automobiles!
The Inflation Guy also editorializes on Germany's recent decision to stop further issuance of inflation-linked bonds.
NOTES
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This month's CPI report was softer than expected, which is welcome. And there were some quantitative effects in the data which (while expected in the big picture sense) are encouraging. However, a lot of the improvement this month were from fairly obvious one-off categories that moved in the opposite direction from what third-party surveys (for example) were suggesting they would - and most of these will end up being paid back in another CPI report soon. The Inflation Guy walks through it all!
NOTES
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The Inflation Guy has a little thing about risk. Not merely avoiding it, and certainly not seeking it - but counting it. By carefully decomposing risks into component parts, a portfolio manager can be better prepared for the sorts of risks that can befall a portfolio and also find cheaper ways to express the sorts of risk that he or she wants to have in that portfolio. In this episode, the IG talks about how he thinks of risks, and his mission to decompose everything.
Which sort of sounds gross when we say it that way.
NOTES
Podcast Callback: “Ep. 19: Dual Duration – Why TIPS are Exactly Half the Story”
Medical Care Inflation Security: Macro Shares Medical Inflation Up Trust (never issued)
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This morning's Payrolls Report was weaker-than-expected; among other things it included an increase in the Unemployment Rate to 3.9% - fully 1/2% higher than April's low for that number. Does this mean that we are going to have slower wage growth, and slower inflation? Or possibly one of those and not the other?
And what does it mean for growth? The Inflation Guy reviews the historical record of prior periods when the Unemployment Rate rose off a prior low, and reaches an unfortunate conclusion.
NOTES
Blog Callback: “The Phillips Curve is Still Working Just Fine”
Blog Callback: “Money Velocity Update!”
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In this too-late-in-the-week episode of Cents and Sensibility, the Inflation Guy takes on supply and demand curves, market clearing prices and quantities, and says you're doing it all wrong.
It's more nuanced than that, but they charge us by the word for these summaries.
NOTES
Blog Callback: “Shortages are Unmeasured Inflation” https://inflationguy.blog/2021/10/24/shortages-are-unmeasured-inflation/
Blog Callback: “Enough With Interest Rates Already” https://inflationguy.blog/2021/10/24/shortages-are-unmeasured-inflation/
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Sometimes, the episodes write themselves.
In Episode 84, the Inflation Guy pointed out that with real yields now comfortably above 2%, TIPS are at least fair and possibly just downright attractive from a long-term perspective. "Is it Time to Buy TIPS?" he asked.
But back in Episode 31, the Inflation Guy discussed "Why Gold is Like TIPS (or Vice-Versa)."
So, by the commutativity principle of podcasting (actually we just made that up), it follows that we should probably ask "Is it Time to Buy Gold?" So in this episode, the IG squares the circle and answers that question.
[He also clarifies that gold is lots heavier than TIPS. So they're not identical or anything. For that matter you can't make a necklace out of TIPS.]
NOTES
Podcast Callback: “Why Gold is Like TIPS (or Vice-Versa)” https://inflationguy.podbean.com/e/ep-31-why-gold-is-like-tips-or-vice-versa/
Podcast Callback: “Is it Time to Buy TIPS?” https://inflationguy.podbean.com/e/ep-84-is-it-time-to-buy-tips/
Blog Callback: “How Higher Rates Cause Big Changes in the Bond Contract” https://inflationguy.blog/2023/10/17/how-higher-rates-cause-big-changes-in-the-bond-contract/
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Another month, another CPI report. In recent months' reports, the Inflation Guy has warned "Don't Get Used to It!" (Episode 77) and "The Easy Part is Over" (Episode 81). Those months saw flaccid CPI figures that were easy to see through, and this month inflation returned to something approximating the old trend.
In this episode, the Inflation Guy walks through the report with an eye to what happened, but more importantly what happens next. You will want to know why he thinks that the hard part...has just begun.
NOTES
Praxis Financial Publishing Q&A of the Inflation Guy: https://lnkd.in/emCrcnHs
Blog Callback: “Enough With Interest Rates Already” https://inflationguy.blog/2023/06/21/enough-with-interest-rates-already/
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This is an episode with a call to action!
In this episode, the Inflation Guy discusses the current state of nominal and inflation-linked yields, and gives some historical context as to where those stand in the Grand Scheme of Things. In doing so, he explains why TIPS' downside is much more well-defined that those of normal Treasury notes, and why the current level makes it a good time...well, anyway, you can listen to the episode and find out!
NOTES
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So often, the Inflation Guy is asked to recommend a good book on inflation. Just one? That's crazy. There are oodles of good books on inflation, and in this episode the Inflation Guy recommends eight.
Okay, one of the recommendations was less-than-enthusiastic. But these are all worth reading. Listen to the podcast, and visit the links below to see the books in Amazon or other site.
[erratum - Inflation Guy in this episode refers to the author of Economics as Robert Samuelson. He obviously misspoke because no reasonably-educated economics student wouldn't know that Economics was written by Paul Samuelson, who won a Nobel Prize by the way. Also William D. Nordhaus, who did not.]
NOTES
Podcast Callback: Ep. 15: An Interview with Special Guest Milton Friedman
Books Referred to:
Fiat Money Inflation in France, Andrew Dickson White, 1933 (free pdf)
When Money Dies, Adam Fergusson, 2010
Inflated: How Money and Debt Built the American Dream, R. Christopher Whalen, 2010
The Great Inflation and Its Aftermath: The Past and Future of American Affluence, Robert J. Samuelson, 2010 (funny how many of these are from 2010. Never noticed that before.)
Money Mischief: Episodes in Monetary History, Milton Friedman, 1994
Asking About Prices: A New Approach to Understanding Price Stickiness, Alan Blinder, Elie Canerri, David Lebow, 1998
The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival, Charles Goodhart and Manoj Pradhan, 2020
The Mandibles: A Family, 2029-2047, Lionel Shriver, 2017
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Eleven episodes ago, the Inflation Guy presented five ways that endowment CIOs could improve their inflation allocations. In a way, that put the cart before the horse and so the IG is circling back: what is it about UPMIFA that virtually demands that CIOs address their asset strategies in real space?
The basic problem is that two of the seven factors that endowment investment committees are to consider under UPMIFA are in tension in nominal space. But, by changing the problem to look at it in real space, the "consideration of inflation" requirement and the "real value of the endowment" requirement can operate in harmony.
Well, that's the gist of it. Listen to the podcast to hear why this is true!
And check out our new website! (link below)
NOTES
Podcast Callback: Ep.71: 5 Simple Ways an Endowment Can Improve its Inflation-Protection Allocation
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In this edition of the monthly CPI Report Summary, the Inflation Guy sets the stage by reminding us about the backdrop: the low, low inflation reports of the last two months. These were somewhat quirky, in mostly different ways, and the IG explains why today's higher-than-expected inflation report is a sign that - although things are getting better - inflation is about to get to the 'sticky part' where continued improvement all the way to the Federal Reserve's goal becomes more challenging.
NOTES
Podcast Callback: Ep.74: Inflation Folk Remedies
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“Hedonic adjustment” is a curse word among those who think that inflation figures are all scrubbed to look nice by the Bureau of Labor Statistics (if they are, the BLS did a pretty rotten job of it over the last couple of years!), but it is not nearly as sinister as you might think it is. In this episode, the Inflation Guy goes inside-baseball again to explain hedonic adjustment, and the offsetting effect that no one ever seems to complain about because it pushes inflation higher.
It's okay to hate inflation, but don't blame hedonic adjustment! Or the Inflation Guy. He's just the messenger.
NOTES
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Podcast Callback: Ep. 4: The Making of an Inflation Index
Website reference: BLS Link to Hedonic Adjustment Q&A
Website reference: BLS Link to Hedonic Adjustment for Men’s Suits
Research reference: Johnson, D.S., S.B. Reed, and K.J. Stewart . 2006. “Price Measurement in the United States: a Decade Aftert he Boskin Report.” Monthly Labor Review 129 (5): 10–19.
The inflation derivatives market is currently suggesting that prices will decline in the US between August (the report we get in a couple of weeks) and December. Does this mean that inflation is upon us? No, and the reason why is something called 'seasonal adjustment.'
It turns out that seasonal adjustment is critically important for inflation markets, and the market's pricing is not nearly as outlandish as it looks. In this podcast, the Inflation Guy explains in plain English what seasonal adjustment is, and what it means in this case.
NOTES
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Recent data out of China has shown growing stresses in the property market, implying stresses in banking; weakness in the trade balance; and generally disappointing growth. This has led some observers to suggest a deflationary wave is headed our way. In this episode, the Inflation Guy recalls a prior example where weakness in Pacific Rim countries actually provoked acceleration in Western economies, and rising inflation.
NOTES:
Book: Maestro, My Ass! https://amzn.to/45hhFbP
The US CPI was released today and was a modest positive surprise to expectations that were already pretty optimistic in the sense that economists (and the Inflation Guy) were expecting a low print. In this podcast, the IG breaks down the report and points out the very positive developments...along with some curious quirks that soften the miss.
But the big question is, what happens next? And here, the Inflation Guy is less sanguine. He gets specific about why, in this podcast. Tune in, and subscribe!
NOTES
Pod callback: “Inflation Folk Remedies”
Blog callback: “Three Colliding Macro Trends”
Blog callback: “Summary of My Post-CPI Tweets (July 2023)”
To Subscribe to the Quarterly Inflation Outlook: https://inflationguy.blog/shop/
The Inflation Guy, let's face it, sometimes goes a little off the rails when the topic is inflation and the importance of the inflation lens. In this episode, he compares inflation to the fabric of space-time. Can you imagine?
The upshot is that even if you don't know anything about space-time, it is still very important to you - and it is crucially important if you happen to be launching rockets. So if you're launching investment rockets, then the fabric of the price-system-space-time should be very, very important to you. It's a good point.
Just seems like he could have said that more succinctly.
NOTES
Blog callback: “Wimpy’s World”
Pod callback: “Ep. 21: Recording for Posterity the Absurdity of Negative Interest Rates”
Chart of Enduring Quebec Retiree Inflation strategy vs Qc Retiree Inflation: Thru June 2023
Let's take a big step back. The Inflation Guy spends a lot of time in his podcasts talking about the current CPI figures and fairly short-term considerations. But economic episodes are like books, with rising action, a climax, and falling action - and bigger cycles are like book series (think Harry Potter). As we get closer to the end of this book, we need to think about how the next book advances the plot. The Inflation Guy talks through the current chapters, looks forward to the end of this book, and suggests what he thinks Book 2 will look like. Because inflation is not a book you can put down: you're in it to the end.
NOTES
Podcast callback: “Ep. 50: What the Money Velocity Comeback Means for Inflation, and Investors”
The Inflation Guy's book: “What’s Wrong with Money?: The Biggest Bubble of All” – by the way the price online is absurd. Email inflationguy@enduringinvestments.com and he can sell you out of his own stock. If you're in Europe, try https://www.wiley.com/en-be/What%27s+Wrong+with+Money%3F%3A+The+Biggest+Bubble+of+All-p-9781119191162
Chart of the M/Q and V convergence: https://inflationguy.blog/wp-content/uploads/2023/07/convergence.jpg
Link to Trivia Answer Audio: https://www.youtube.com/watch?v=q4-gsdLSSQ0
There is something between 'snake oil salesmen' and trusted information providers. People giving you folk remedies are generally well-intentioned, but merely lack the background to be truly authoritative about the malady they are trying to cure.
So it is with economics, and these days especially with inflation.
In this episode, the Inflation Guy gives three current examples of inflation-related advice and popular models that fall into the category of 'inflation folk remedies.'
NOTES:
Book: This Time is Different: Eight Centuries of Financial Folly by Carmen M Reinhart and Kenneth S Rogoff
Podcast callback: “Ep. 72: Chapwood Index vs CPI – Which is the Better Inflation Index?”
Article: “This Statistic Could Be Distorting How We Think About Inflation,” New York Times.com
Article: “Disentangling Rent Index Differences: Data, Methods, and Scope”, by Brian Adams, Lara Loewenstein, Hugh Montag, and Randal J. Verbrugge
Blog Article: “Multivariate Core Trend Inflation”, Federal Reserve Bank of New York
In the monthly analysis of the CPI report, the Inflation Guy reflects on an improving inflation picture while cautioning that it isn't improving quite as much as the surprisingly-awesome core and headline figures today suggested. There were two large outliers that likely won't repeat. That said, it is a positive-enough report that the Fed's presumptive rate hike expected later this month might be deferred.
Inflation continues to trend slowly lower, but only slowly - and although the longest journey begins with a single step there are a whole lot of steps ahead before we get to the 2% Promised Land.
Notes:
Inflation Guy Shop: https://inflationguy.blog/shop/
The Inflation Guy is often asked about the Chapwood Index, which is a non-governmental inflation index that is billed as a “true cost of living index, unlike CPI.” In what ways does this index achieve that goal, and where does it fall short? This episode also serves as another illustration of how the Inflation Guy can go off the rails even when given a simple assignment. Which is better, Chapwood or CPI? See what the Inflation Guy has to say about the matter.
Notes:
Price Stats (neé Billion Prices Project) https://www.pricestats.com/inflation-series?chart=1837 - an independent (but no longer free) inflation index that the Inflation Guy likes better than the Chapwood Index.
Blog article: “Eighth-Grade Math vs Shadowstats” https://inflationguy.blog/2021/05/25/eighth-grade-math-vs-shadowstats/
Podcast callbacks: “Ep. 7: Rents and Sensibility” https://inflationguy.podbean.com/e/ep-7-rents-and-sensibility/
“Ep. 4: The Making of an Inflation Indedx” https://inflationguy.podbean.com/e/inflation-guy-podcast-episode-4-the-making-of-an-inflation-index
The Inflation Guy shows a bit more focus in this episode of the podcast, aiming his comments squarely at endowment CIOs and the OCIOs that serve them. He discussed 5 simple ways that an endowment can improve its inflation-protection allocation. Take the test! If you're already doing all five, you are in the 99th percentile.
But if you're not - it's fixable!
NOTES:
“TIPS, the Dual Duration, and the Pension Plan,” Laurence B. Siegel & M. Barton Waring: https://www.tandfonline.com/doi/abs/10.2469/faj.v60.n5.2656
“TIPS, the Triple Duration, and the OPEB Liability: Hedging Medical Care Inflation in OPEB Plans”, Michael Ashton, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1838545
In this episode, the Inflation Guy confronts the question of "Greedflation." What is it, and is it real? Is inflation all the fault of smelly capitalists? And what is the difference between the consumer's greed, wanting to pay less, and the company's greed, wanting you to pay more?
Corporate margins are expanding, along with higher inflation. Does that constitute prima facie evidence of greedflation? The Inflation Guy tackles this too, despite completely butchering the pronunciation of "prima facie." He also mentions the Illuminati. Really, you can't miss this episode.
NOTES
Good article: Are greedy corporations causing inflation? The Economist https://www.economist.com/finance-and-economics/2023/04/30/are-greedy-corporations-causing-inflation?giftId=21b1b229-c3bf-4371-bf72-4fd9291cac04
Good book: The Bigness Complex: Industry, Labor, & Government in the American Economy, Walter Adams and James W Brock. https://amzn.to/3NGnmtw
Good Movie: “Everything Everywhere All At Once” https://amzn.to/3NjNOrD
Good blog post: “Enough with Interest Rats Already” https://inflationguy.blog/2023/06/21/enough-with-interest-rates-already/
In this, the monthly analysis of the CPI report, the Inflation Guy homes in on a couple of reasons that core inflation is staying high, despite widespread forecasts that it should be decelerating more quickly:
- Rents are still rising at about 6% per year, even though many economists have convinced themselves that rents should decline (despite higher costs for landlords, higher incomes for customers, and higher prices of a substitute), and
- Wages are still rising at about 6% per year, which tends to lend persistence to core services ex-rents (so-called "Supercore").
There are some positive signs in the data, but even as inflation declines slowly on base effects there are few signs that core inflation is dropping below the 5% or so level it has been around for the last few years. A Fed on hold seems appropriate.
Reference: "How Much Do Labor Costs Drive Inflation", Economic Letter, San Francisco Federal Reserve
In this episode, the Inflation Guy answers a question he is often asked: what makes a good trader? In listing what he thinks the four main attributes of a good trader are, he demonstrates one of them here by asking the question, "How could I be wrong?" and discusses how he would structure a position based on that assumption.
So, if you tuned in this week as one of the people thinking 'this guy is sooo wrong,' then this is the episode for you!
References in this episode:
"What if We’re Thinking About Inflation All Wrong?", The New Yorker, June 6, 2023
"Bad Idea of the Year - Wage and Price Controls", Inflation Guy Podcast Ep. 37, August 22, 2022
"CPI Swaps Improving? Not as Significant as You Think", Inflation Guy Blog, June 7, 2023
The Fed, along with most global central banks, considers 2% (or in that neighborhood) to be the definition of "price stability" that it aims for. Except that in the Fed's case, that 2% is on PCE (not CPI), and they only aim to hit that as an average over some (unstated) period of time.
However, even that is proving to be...somewhat difficult, leading to "murmurs" in some quarters that the Fed should change its target to 3% rather than 2%. For example, see this article in Reuters from May 24th: https://www.reuters.com/markets/us/murmurs-grow-within-fed-about-tweaking-2-target-once-inflation-recedes-2023-05-24/
In this episode, the Inflation Guy reviews the history of the 2% target, including how it's sort of a squishy target...which the Fed doesn't really have the power to hit anyway. The Inflation Guy goes a little nuts with the analogies but you will get the point.
Tune in for the trivia question; stay for the history lesson!
Please like, subscribe, and refer!
This week, the Inflation Guy brings another special guest on the set.
Andy Fately is a veteran of more than 40 years in the foreign exchange markets, trading spot, forwards and options as well as running businesses for major US and international commercial and investment banks. He is known as the FX Poet (https://fxpoetry.com/about-2/), but really focused on creating solutions for risk managers for problems as they arise.
Andy and the Inflation Guy tackle the question that naturally follows from headlines like these from earlier this year (links take you to the story):
- Russia embracing the Chinese yuan for much of its global trade
- Saudi Arabia considering invoicing oil exports to China in yuan
- France buying gas from China in yuan
- Brazil and China agreeing to ditch the dollar for bilateral trade
- BRICS countries planning to develop a new reserve currency
- Kenya promising to ditch the dollar for oil purchases
- ASEAN members discussing dropping the dollar for cross-border payments
- India settling some trade in rupees
Should US citizens, or dollar-users in general, be concerned that the sun may be setting on the US Dollar? How would this happen, and is it likely to happen? Andy Fately and the Inflation Guy combine their knowledge (which, to be fair, mostly belongs to Andy) and push back a bit on the 'bear porn' disaster cases by walking through the actual mechanics that would be involved in a de-dollarization.
Like, subscribe, comment!
The Inflation Guy addresses this month's CPI report, which showed an above-expectations Core CPI number (by a little). However, the internals of the report were not too bad, and according to the Inflation Guy today's data turns out to be a really good one supporting the timing of the Federal Reserve Board's pivot from active-tightening to steady-policy. The months ahead, though, still are unlikely to deliver what the market is pricing in, setting up a denouement for later in the year. For today, however, sing a new song unto the 'Board!
The M2 measure of the money supply has declined 4% from its peak 8 months ago - the largest decline since M2 has been measured starting in 1959. On the other hand, the Velocity of M2 has risen 8%, tying the largest increase in history. Which of these two titanic monetary tides will prevail? Does the decline in money presage the beginning of a deflationary debacle (at least for the stock market)?
The Inflation Guy takes on this question and untangles the truth for you.
Plus, he added a trivia question. So, there's that.
In this episode, the Inflation Guy again tilts at windmills by ranting about recent comments by Bank of England Chief Economist Huw Pill to the effect that the reason inflation is remaining high is because normal people are not accepting that they are worse off, and therefore insist on arguing for higher wages rather than "taking their share" of the pain. Wow, he gets animated in this one. It's only Episode 63. What is the Inflation Guy going to be like when we get to Episode 100?
It has become de rigeur in economics circles (word to the wise - always avoid such circles if you wish to retain your ability to think independently) to bemoan the death of the “Phillips Curve.” The Phillips Curve supposedly describes an inverse relationship between inflation and unemployment. "Supposedly”? In this succinct episode, the Inflation Guy explains why poor William Phillips' good name has been dragged through the mud unnecessarily. There is nothing wrong with his curve!
In this podcast, the Inflation Guy refers to a chart. It's hard to see charts on audio, so here is a link to the chart in case you want to follow along:
The Real Phillips Curve
When is a perfect forecast not a perfect forecast? When you got the reasons wrong. This ain't hurling hand grenades, where only the result matters - if you made a bunch of positive mistakes and a bunch of negative mistakes and they happen to offset, you're not a genius; you just got lucky. So today, Wall Street economists forecast 0.39% on Core CPI. That was exactly what they got. But for all the wrong reasons, and the reasons are important.
In this episode, the Inflation Guy (whose forecast wasn't even right, so who is he to judge?!) highlights the two things which dragged down Core inflation...neither of which was expected by almost anyone. So the news overall is good, not great, and the Inflation Guy will tell you why.
If you like the podcast, please click that like button and forward it to a friend!
The Inflation Guy doesn't understand why some people love to be the smartest person in the room. That's not fun at all! The Inflation Guy wants to be no better than the second-smartest, so he can always be learning. This is the first episode where he achieves this goal in a podcast format, with a real live guest who is deeply experienced in how insurance companies evaluate and address inflation risks.
Bill Poutsiaka is a senior financial services executive who has been a CEO, Chief Investment Officer, and board member for global insurance and asset management businesses. Bill has served as an active director on the boards of public, mutual, private and non-profit organizations. These organizations have included global, domestic, large, small, multiline and highly specialized insurance and investment entities. His executive roles include Chief Investment Officer & SVP of AIG Property Casualty following the financial crisis; CEO of quantitative firm PanAgora Asset Management, and CEO Arkwright Mutual Insurance Co which he merged to form FM Global.
More importantly, he is an old friend of the Inflation Guy. In this episode of the podcast, they talk about how insurance companies think about and address inflation risks...and also go 'into the lab' to talk about some of the things they ought to do, if they don't.
Bill is currently consulting, doing board work, research on application of emerging data science methods, mentoring, advising/coaching fintech organizations and startups, publishing, and speaking at conferences and universities. If you want to get in touch with him, drop the Inflation Guy a message at InflationGuy@EnduringInvestments.com
In this episode, the Inflation Guy presents an introductory-level discussion of the concept of "delta," applying it to securities and explaining how the concept is used (in fairly plain English), but also applying it to exposures outside of the finance world. If you are someone who agreed with the tenor of a recent news article referring to the "arcane area of trading known as delta-hedging," you might find the Inflation Guy's perspective refreshing.
If you like this podcast, please be sure to 'like' us, forward the links to your friends, and talk about us often. And return next week for more!
In this episode, the Inflation Guy discusses how volatility is a feature, not a bug - and how the Silicon Valley Bank debacle is not likely to lead to lower inflation at all. He also tells an interesting story about how deposit interest rates used to be capped, and how uncapped deposits have often been associated with bad outcomes at poorly-managed banks (and lots of them).
Some sources for this podcast:
Rolnick, Arthur J., “The Benefits of Bank Deposit Rate Ceilings: New Evidence on Bank Rates and Risk in the 1920s,” Federal Reserve Bank of Minneapolis Quarterly Review, Summer 1987. https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=148ae4d7a7bd36d2a3e851fb543d6350cdfa20d4
“Deposit Deregulation,” Federal Reserve Bank of San Francisco, Weekly Letter, April 10, 1981. https://www.frbsf.org/economic-research/wp-content/uploads/sites/4/el81-15.pdf
Banking Strategist website: history of US Bank Failures. https://www.bankingstrategist.com/history-of-us-bank-failures
On Friday, the Inflation Guy thought no one would care about this month's CPI given the bank failures starting with Silicon Valley Bank. But actually, this number turns out to be quite important - the Fed needed a soft report, so that there would be no conflict between the rate trajectory needed to calm markets and support banks (lower) and that needed to quell inflation and inflation fears (higher). Whoops. Median CPI is still rising, putting the Federal Reserve...really, for the first time since the tightening began...in something of a box. Also, has anyone noticed that nearly 500bps of tightening hasn't slowed inflation? Maybe rate hikes are the wrong focus? Nah.
It has been a long time coming, but in this episode of the Inflation Guy Podcast, the IG talks about a new way to trade inflation - and it's a way that's available to the individual, and not just the hedge funds and large institutions! Inflation futures, although not fully mature, are here!
Go ahead, click. You know you want to hear about "Models Gone Bad."
You might also hear about how some recent work the Inflation Guy has done is persuading him that he is also being too optimistic about the speed at which inflation will decelerate. And no one, at least recently, has accused the Inflation Guy of being optimistic about inflation.
The question that Inflation Guy addresses is causal: does the productivity enhancement promised by AI mean that future inflation will be lower, or not?
But in order to boost productivity, we asked ChatGPT to write the synopsis. After trimming most of the 538-word answer, the only relevant bit was this:
"In this episode, we explore the potential role of artificial intelligence (AI), a rapidly advancing technology that enables machines to learn from data and make predictions or decisions, in shaping the future of inflation. Can AI help us manage inflation more efficiently and effectively, or could it exacerbate the risks of inflation in unexpected ways? What are some examples of AI applications that have already influenced inflation dynamics, and what are some challenges and opportunities for further research and development?"
That isn't at all what this episode is about. Although admittedly it sounds interesting.
In this month's CPI Report from the Inflation Guy, he points out that a report that is broadly strong, with some negative outliers, does not have the same implications as one that is broadly weak, with some negative outliers. The market was expecting the latter, but got the former. That inflation target of 2% is not looking any closer today.
The Inflation Guy delivers the State of Inflation Address with accuracy, brevity, clarity, and euphony. Well, two out of four isn't bad. If you listen to only one State of the Union Address this year, listen to this one...also!
Be sure to tune in on Tuesday for the monthly CPI Report summary, which will be longer, and with less background music.
In this episode, the Inflation Guy explains why the Bureau of Labor Statistics is re-weighting CPI beginning with the report on February 14th, and what it means for you. He also points out that the prior re-weighting really did dampen inflation measurements a little bit...is the government trying to hold down the inflation report??
With today's report of Q4 GDP, money velocity jumped the most in a quarter since 1981 (with the exception of the bounce in late 2020), and the most in a year since 1982. Velocity, it seems, is not 'permanently impaired'! It acts more like a car trailer attached to the car by a spring, and it's starting to catch up. This has large implications for inflation going forward, and for investors.
In his never-ending quest to shine a light in the benighted economic darkness, the Inflation Guy today discusses a key component of the Fed's inflation models: consumer inflation expectations. Let's be fair, I think he leaned too much on Jeremy Rudd's paper in this one, but at least he delivered it with his inimitable Inflation Guy style. Listen, like, and recommend!
In this month's CPI summary, the Inflation Guy ruminates on an as-expected number and wonders whether 'returning to the mean' is as important as the question of whether the mean has shifted, and where it has shifted to!
The Inflation Guy has hopes and dreams too, you know. In this episode, the Inflation Guy muses about things he'd like to accomplish in 2023 - and also suggests some things that you, the listener, ought to resolve. Kinda presumptuous if you ask me, but they just pay me to write the summaries.
In this edition of the monthly CPI report review, the Inflation Guy examines the small downside surprise in today's report, and blames Christmas. The Inflation Grinch explains that as it happens Christmas comes but once a year, but in 2022 more of it seems to be in November. Or something like that. To be honest I was too hopped up on eggnog to follow.
In this episode, Inflation Guy attempts to conquer territory previously held by Captain Obvious as he addresses the question of whether cryptocurrency can be a hedge against inflation. Or against anything else, for that matter. In this episode he also presents an important rule of investing: it is not supposed to be exciting.
In today's podcast, the Inflation Guy opens his mail. No, really, it's more interesting than that sounds.
The inflation report this month was much more tame than economists expected, leading to a raucous rally in the markets. Seriously, they needed a break. But is this a little premature? The Inflation Guy in this episode breaks down not only the CPI - and the weird technical adjustment in health insurance that caused much confusion - but also the inflation impact of the midterm election results. Headache, indeed!
Are you looking for a splendid collection of random inflation thoughts and snippets to brighten your day? No? Well, listen to this podcast anyway! In this episode the Inflation Guy talks about housing, money velocity, and the Fed's trajectory. It really will brighten your day. Or maybe it won't. Heck if I know.
The Inflation Guy has asked the question before and it was the topic of last month's CPI report: are we "there" yet? The answer, evidently, is no. Today's inflation report was another high surprise, and moreover the parts of the CPI where a wage-price spiral would show up...are becoming worrisome.
A listener wrote in to ask about whether the analogy (Ep. 37) about price being the fulcrum between buyers and sellers in the economy has different implications when the buyers are competing on different terms. What if one guy buys all the butter? This would make the Inflation Guy sad, because he loves butter - but more deeply, the answer to the question bears on what the function of the price system is, and when it can be said to be "not working."
It seems that we keep thinking that inflation has reached a peak, and that inflation pressures are on their way back down. The market seems to have gotten very confident about that fact. In this episode, the Inflation Guy asks and answers the question...are we there yet?
Two weeks ago, President Biden waved his hand and forgave billions of dollars of tuition debt. Predictably, many have called this super-inflationary because of the increase in the deficit it entails. Is it? The Inflation Guy may surprise you with his answer, and with his warning for Republican strategists.
Why can't policymakers take a year off from dumb ideas every now and then? In this episode, the Inflation Guy addresses the various concerning clues that Powerful People are thinking about implementing wage and price controls to address high inflation. Because, evidently, they'd rather have shortages and ration cards. This is a bad idea; it has always been a bad idea; it has never worked and never will. Let's stop it before it gets started. (Yes, this is a rant.)
Why can't policymakers take a year off from dumb ideas every now and then? In this episode, the Inflation Guy addresses the various concerning clues that Powerful People are thinking about implementing wage and price controls to address high inflation. Because, evidently, they'd rather have shortages and ration cards. This is a bad idea; it has always been a bad idea; it has never worked and never will. Let's stop it before it gets started. (Yes, this is a rant.)
In the monthly CPI analysis, the Inflation Guy highlights the dichotomy from today's CPI report: all of the things that improved, and led to a surprise in core CPI, were 'supply chain', flexible things; meanwhile the sticky stuff like rents and medical care continued to be problematic. Does this help the Fed? Does it help the market? Does it help the Fed help the market? Listen to find out.
In the monthly CPI analysis, the Inflation Guy highlights the dichotomy from today's CPI report: all of the things that improved, and led to a surprise in core CPI, were 'supply chain', flexible things; meanwhile the sticky stuff like rents and medical care continued to be problematic. Does this help the Fed? Does it help the market? Does it help the Fed help the market? Listen to find out.
This is a quick 'policy brief' focusing specifically on whether the Inflation Reduction Act will actually reduce inflation or not. The overall answer is somewhat milquetoast, but the details are interesting. The big question is, why do the bill's sponsors suppose it will reduce inflation? The answer is revealing.
Let's see, the cue card here says that money velocity is an anachronistic concept; velocity is a plug number that has no economic significance; its value has been 'disproven'; and anyway velocity is dead forever so, not to worry.
It's a good thing that the Inflation Guy doesn't read cue cards! Otherwise, he might not have expected the current turn higher in money velocity, and he might be tempted to believe market pricing that says inflation is about to obediently plunge back to the Fed's target. And where would be the fun in that?
The Inflation Guy is running out of ...what's the opposite of "superlatives?"...to describe the current inflation environment. The July CPI report was yet another new high and yet another upside surprise. So what is the Fed going to do in response? And why does the market seem so confident that inflation is about to plunge back to 2%, when it is still rising at the moment?
So they told the Inflation Guy: "People love 'whodunnits.'" We don't really know why they told him that but in any event we have one here: what a story! The tale of inflation futures starts in the 1800s; it has economists and hippies and heroes and villains; a noble quest and a tragic ending. Or is it really tragic? Or is it really an ending? Listen and find out!
Gold isn't as simple as it looks, or feels. Or smells, for that matter. In this episode of Cents and Sensibility, the Inflation Guy explains why gold doesn't act much like a short-term inflation hedge, but actually behaves much more like TIPS. Should gold have an outsized position in your portfolio? Depends how you feel about inflation-linked bonds!
The Inflation Guy starts out his discussion of today's CPI report with a warm, folksy, home-spun tale. Because why can't inflation be warm and folksy? The problem is that today's data crushed the existing paradigm on which the market was depending - and opened up a whole new can of worms. The concern is not specific; it's general. And that's the problem.
The housing data for Existing Home Sales and Existing Home Sales over the last week have been very interesting not for the data themselves but for how they have been interpreted. The Inflation Guy in his inimitable style geeks out on the cognitive errors that are being manifested in these interpretations, and sets the record straight about how we need to adjust our thinking now that we no longer live in a stable inflation world.
Have we peaked? Well, arguably the Inflation Guy peaked in his 20s but we are talking about inflation here. While CPI has nominally peaked in terms of its year over year rate of change, that doesn't mean prices are going to go 'back to normal.' Even more important: it doesn't mean that we have reached peak inflation pressure. Listen while the Inflation Guy explains.
Today the Federal Reserve raised the overnight Fed Funds rate 50bps - the largest such increase since May 2000 (and the Inflation Guy is sticking by the title of this episode since technically the 20th century didn't end until 12/31/2000!), and Chairman Powell strode confidently to the microphone in the post-meeting presser. How does this action, and what Powell said, impact the inflation outlook and why did the markets behave the way they did? (The answers are: not much, and for unhealthy reasons, but listen to the podcast anyway.)
It has taken too long to get to this episode! Today (after spending approximately 8 minutes ranting) the Inflation Guy talks about I-Series Savings Bonds, affectionately known as I-Bonds, which should be the first investment that goes into a saver's "Emergency Fund." You can't do this with big money, but that doesn't mean you can't be the smart money even with small amounts. In this podcast, the IG refers to the "I Bond Manifesto," which is a good summary of the salient characteristics of I-Bonds. It can be found at https://tipswatch.com/i-bond-manifesto/ (among other places).
The Inflation Guy covers this month's CPI report. It is widely expected to be the peak CPI for the cycle, or at least for this year, and the IG agrees with that. But how excited should we be? How far down this peak will inflation tumble? It surely depends somewhat on the Fed - and the Inflation Guy is skeptical that they have the will to do what it takes when 'what it takes' is going to do bad things to other markets.
How should we think about property - investment property as well as the home you live in or want to buy rather than renting? In this episode, the Inflation Guy breaks down how he thinks about the drivers of value of real estate. This isn't a real estate sales pitch and the IG won't tell you how to choose the best location or how to evaluate the schools. He doesn't know that kind of stuff. What he does know is how real estate functions as a hedge, and what the big macro drivers are that you should pay attention to - especially now.
The Inflation Guy gives in to his internal grumpy old man, and talks about a few inflation-related items that are sticking in his 'craw.' Are stocks really an inflation hedge? What does it mean when the Fed says they will do 'whatever it takes'? And why are these kids on my lawn?
Another month, another 40+-year high in inflation. 7.9% y/y for headline, 6.4% on core, and we're not yet at the peak. Moreover, the peak is likely to be broader and not sharp, because inflation has infected the whole basket and changed the equilibrium that we are going to recede to. It's as if a juggler has moved from juggling two balls to juggling five; that is a stable equilibrium and will resist moving back. And the Fed is probably going to be careful before upsetting the juggler too much (the Inflation Guy really had to work hard to resist a balls pun).
After some brief comments on how the Ukraine-Russia conflict fits into the narrative about rising inflation pressures going forward, the Inflation Guy turns to a phenomenon that will soon be one for the history books, probably never to be seen again: negative nominal interest rates. A theoretical absurdity, this lengthy episode demonstrates that sometimes truth is stranger than fiction - and in the kind of world where money tomorrow is worth more than money today, a lot of our notions about how things should work are turned on their heads. Let's reflect on this now, and appreciate just how bizarre the last five years have been.
Core CPI above 6%; headline at 7.5%. 40-year high after 40-year high. What is the 'ongoing inflation debate'? The answers here are pretty simple. If you want fewer birds in your backyard, quit throwing birdseed out there.
The Inflation Guy breaks down the topic of "duration," and explains how there is a more thorough and useful way to think about bond risk as consisting of two parts (originally described in a paper by Waring and Siegel in 2004). Inflation Guy illustrates where TIPS live in this framework through the device of a "pastry bond," and explains why this concept is very important for individual and institutional investors alike.
Why do we hold cash? For anticipated needs, precautionary requirements, and sometimes because there are no better alternatives. In this episode, the Inflation Guy suggests that the role of cash in a portfolio is also to serve as an option on future opportunity, and the cost of the option is inflation. This has some interesting implications for asset prices and monetary policy effects today.
Inflation continues to show broader and deeper, and now is entering the general business and consumer mindset. In this episode, Inflation Guy talks about the idea that year-over-year inflation may peak soon, but probably won't go back to the old 2% level. In the long term? Well, that depends on whether the Fed can channel Paul Volcker, and worry less about breaking eggs and more about whether we can afford eggs.
In this wide-ranging, and yet somehow too-short, episode, the Inflation Guy unpacks what it means to "invest in commodities" - sources of risk and return, and common misconceptions that tend to lead investors astray when thinking about this crucial asset class. Where does the long-run return in a commodity index, and the correlation with inflation, come from? Perhaps you will be surprised at the answer!
The Inflation Guy welcomes his first guest ever to the Cents and Sensibility Podcast: Nobel Laureate and the OG of monetarism, Dr. Milton Friedman, to talk about the inflation problem. As we wrestle with headline inflation of 7% and core inflation of 5%, it is worth listening to the man whose prescription helped squash the inflation of the 1970s - but whose words today fall on the deaf ears of (supposed) economic sophisticates.
The Inflation Guy walks through this month's inflation number, which reaches levels we could scarcely have imagined just two years ago...and it isn't done yet. It's broader, and faster, and it's 100% policy error. Moreover, it's a policy error that will be very hard to undo - and maybe can't be completely undone at this point.
Can a 27-minute podcast be a substitute for a thoughtful conversation with an inflation-aware adviser? Probably not, but it is a decent first step for an investor who wants to be inflation aware (and wants to be able to discern and avoid advisers who aren't!) In this podcast, the Inflation Guy talks about the current environment and some general implications for navigating an investment environment which will be markedly different over the next ten years compared to what it was for the last quarter-century.
One swallow does not make a spring, it is said. But eventually, enough swallows would seem to indicate a higher probability of spring. In this podcast, the Inflation Guy connects the transitory swallow to transitory price increases and asks, "is it spring yet?"
This month's CPI report was upsetting to the Inflation Guy. The inflation news is getting worse, and there is no longer any mystery that this is not a temporary, one-off problem. Moreover, the cause is clear and we have seen this coming for a while. It's enough to turn one's stomach. The Inflation Guy walks through the number, explains the significance of the pieces and describes what it is about this report that bothers him most.
In this episode of Cents & Sensibility, the Inflation Guy conducts a quick tour of the concept of monetary velocity. Velocity, which is the "V" in the "MV=PQ" equation that is at the heart of monetarism, is oft-maligned and oft-misunderstood. The Inflation Guy explains what velocity is, describes the main drivers of velocity, and suggests why the current setup is potentially concerning for inflation over the next few years.
The Inflation Guy talks about a couple of the salient points from yesterday's CPI report - indications that "Team Transitory" has been routed and sent off the field in disgrace.
Isaac Asimov's character (from the Foundation series, now an Apple TV series) Hari Seldon is a psychohistorian, which basically means he is a macro-behavioral economist. But he has a much better forecasting rate and a much longer horizon than today's economists. Why? What can we learn from Asimov's invention of 'psychohistory,' and are there any hints that group behavior may be more predictable than it seems to be in practice? Yup!
The biggest weight in most inflation baskets is the cost of shelter. Its weight also implies its importance, since measuring shelter wrong means you're measuring inflation wrong! In this episode of Sense and Sensibility, the Inflation Guy explains why "Primary Rents" doesn't rise as rapidly as the change in asking rents, and why "Owner's Equivalent Rent" is a concept that makes sense - and is a very necessary concept for measuring shelter inflation of owner-occupied housing.
Today's global decline in stocks, if it turns into something more serious, will affect the inflation debate. In this episode of the Inflation Guy Podcast, the IG explains how asset price declines and the relationship of those declines to growth forecasts cause different effects if you are driven by a classical/Keynesian view of the world, rather than a monetarist view. While this decline may not turn out to be very large, someday the stock market will decline - and how central banks look at that event will directly affect policy. But...should it?
"Stagflation" is a term we hear frequently today, as inflation indicators rise and the growth outlook has been looking less-rosy every week. How does a monetarist, as opposed to a Keynesian, think about the conditions that cause a stagflationary outcome? In this episode, the Inflation Guy walks the listener through the Equation of Exchange (MV=PQ), asking how we can get a high change in "P" associated with a low change in "Q."
In this episode of Cents and Sensibility, the Inflation Guy walks through some of the issues that affect the making of an inflation index, and illustrates why decisions about what "measuring inflation" means impacts how an index is constructed, and how it compares with our visceral sense of inflation.
In a first for the Inflation Guy, this podcast is a same-day series of thoughts about what Fed Chairman Powell said about inflation at the Jackson Hole symposium today. Spoiler: Inflation Guy was not pleased.
In this episode of Cents and Sensibility, the Inflation Guy travels from Adam Smith in 1776 to the gold rush in 1849 California to today, where it seems diamonds may actually grow on trees. He makes this journey to explain how relative prices are caused largely by relative scarcities, and explain what that means in the context of inflation.
In the inaugural episode of Cents and Sensibility, the Inflation Guy introduces himself and (perhaps subconsciously channeling comedian Steve Martin's "What I Believe" bit, although if you're giggling about inflation there's a problem) explains some key beliefs he has formed, over thirty years in the financial markets, about inflation and what it means to you.