Whitehouse: Add Trillions To “Ease Inflation”

Fifth circuit court questions vaccine mandate

April inflation 2.6 "transitories" to 6.2 now!

"What do you mean by that?" A look at meaning

The McAlvany Weekly Commentary

with David McAlvany and Kevin Orrick

Whitehouse: Add Trillions To “Ease Inflation”

November 16, 2021

"Those who, all year long, have been characterizing this inflation episode as transitory appear hesitant to revisit their convictions despite consistently contradictory data. In this case, they include inappropriate framing, confirmation biases, narrative inertia, and resistance to a loss of face. Yet, its persistence in the face of repeatedly contradictory data seriously increases the risk of otherwise avoidable economic, financial, institutional and social damage." -  Mohamed El-Erian

Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany. 

I have learned, over the last 35 years here, Dave, that see, I told you so just is really not that satisfactory. Looking at inflation right now, we’ve been told, no, the printing of money, that’s not going to turn into inflation. In fact, we ought to print more to try to dispel any inflationary fears. They’ve called it transitory. Now, at this point, everything that you’ve been saying, Dave, and really, anyone who understands money, who is saying when you print money you create inflation, I guess it’s here.

David: Yeah. With some obvious frustration, the president of Queens’ College, Cambridge, Mohamed El-Erian, was speaking to Bloomberg Television last week. And this was, of course, following the inflation statistics that were reported midweek. And the interviewer asked him this, “One of the worst inflation calls in decades. Why, why do you think it’s this bad?” And his response was, because they didn’t show humility at the beginning of the process. There are lots of structural changes going on in the post-pandemic economy, post-immediate shock, you can’t simply dismiss them as transitory. You’ve got to respect the fact that behaviors change, and they just didn’t have the open mindset enough to see that. So, they got stuck in this narrative, and they held on to it for too long, and the result of which is they’re looking at inflation that is much higher than they ever expected. They’re looking at inflation that is much broader than they expected. And they’re looking at inflation that is going to last even longer than they expect, even now. So, it’s going to go down in history as one of the worst inflation calls by the Federal Reserve.

Kevin: I wonder how Powell will be treated in history. We’ve had a number of Fed chiefs in the past, I think of Burns and Miller and Greenspan, Yellen, we could go to McChesney Martin before all of them. But how will history treat Powell?

David: It was interesting because he came out of the gates being very different, being willing to oppose the current tide. It wasn’t as if he was just being antagonistic on purpose, but there was a reason for him to express his views and have bit of a spine. And we began to see that unwind, and him to accommodate the markets aggressively in a series of decisions. But I think the most recent one, we mentioned last week, the fall of 2019, before the coronavirus emerged, he was already engaged in QE.

Kevin: Well, let me ask. I mean, because we talked about Greenspan in the last couple of weeks, and Greenspan wrote that beautiful piece in the 1960s about gold and discipline in money. It’s almost like they get to the Federal Reserve and they sell themselves to the inflation devil, the accommodation devil, let’s call it that, because it turns to inflation. But the accommodation devil, it’s a terrible thing. I even remember Doug Noland, who works with us, when Powell came in, Doug was like “Give him a chance. It wasn’t the worst pick out there.”

David: It’s Arthur Burns and it’s William Miller that did not ...