Inflation – it’s different this time?
by Tom on June 18, 2009
in Market Musings
An interesting article about inflation and the fear of it. A couple of thoughts:
- Be afraid of anyone who says, “It’s different this time.”
- Hoisington says that it’s different because the weak economy will keep wage and price pressure down. That’s true, but that doesn’t take into consideration the cost of borrowing, the value of the dollar and those factors which are going to play into the markets more than they have in years.
Do I think inflation is a threat right now? Nope.
Do I believe that inflation is that storm on the horizon that’s heading our way? Yes I do.
Do I believe that the current “spike” in interest rates is at least in part because of the government’s massive and inflationary borrowing of unbelievable sums of money? Yes I do.
“It’s different this time.” Yeah, sure it is.
Tom Vanderwell
Investor Daily: Reassessing inflation fears – Jun. 18, 2009
During a recent speech, money manager Van Hoisington, president of Hoisington Investment Management, asked his audience of sophisticated investors to raise a hand if they thought inflation was going to be a problem sooner or later.Everyone raised a hand — except Hoisington.
This “inflationist view of the world,” which he outlines in his firm’s recent quarterly review and outlook, stems from Milton Friedman’s observation that “inflation is always and everywhere a monetary phenomenon.” Hoisington goes on to say that “the Fed has expanded the money supply dramatically, and since inflation is too much money chasing too few goods,” people think inflation is inevitable. But he thinks they’re wrong.
