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.