There is an important debate currently raging between experts within the financial industry. Since it involves a question I’ve been receiving increasingly as of late I am going to address here.
The debate is whether we get significant inflation / falling U.S. Dollar or deflation / rising USD. It should be noted that there are very smart, successful investors, advisors, hedge fund managers and economists on both sides of the debate.
The recent year-over-year Consumer Price Inflation (CPI) prints have been quite high at 4.16%, 4.99%, 5.39%, and 5.37%. However, the bigger question we’re exploring here is if high inflation will be sustained for the foreseeable future or if the inflation is truly “transitory” as some policymakers are suggesting. Continue reading “Inflation or Deflation?”
A question I’ve received frequently the last couple months from many different people is about the potential for inflation given the unprecedented response to the Novel Coronavirus Pandemic. It is an important question because it impacts the best investment approach going forward as well as other personal finance decisions.
I understand the rationale behind the question. After all, trillions of dollars have been pledged between the Federal Reserve and the U.S. Treasury in the last few months in what essentially amounts to a “helicopter drop” of money on the economy. So, it is understandable that people are beginning to have concerns about the potential for inflation.
Ultimately, I believe we will get inflation mainly because the Federal Reserve will stop at almost nothing to make it happen, HOWEVER, we must allow for the possibility of getting deflation first. Continue reading “Deflation or Inflation?”