Frank Byrd talks Inflation: Past, Present and Possible Future

Monday, November 01, 2010


This is an excellent speech discussing how inflation may arise in the future. Byrd isn't a crazy hyperinflationist and presents a reasoned, researched opinion amid the wild claims from both sides of the deflation/inflation debate.

Some notable points:
  • No one under the age of 52 has experienced a world of rising cost of capital.
  • Aggregate credit is expanding, not contracting.
  • Calls for hyperinflation are extremely premature; that can only be judged once we see the policy response in a first moderately inflationary environment.
  • As the Fed can no longer lower the cost of capital substantially firms can only increase profits by lowering capacity.
  • Demand can return rapidly and unexpectedly possibly sparking inflation as capacity cannot be expanded quickly enough to meet demand.
  • We are seeing inflation currently but it is not yet reflected in the CPI.

-Hat tip The Contrary Investing Report

Brandon R. Rowley
"Chance favors the prepared mind."

*DISCLOSURE: Nothing relevant.
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