Maybe it’s just me, but if you’re going to scream about everyone screaming about inflation it’s probably not a good idea to use Janet Yellen’s face as this idea’s avatar. Even if most in the public likely don’t know why, this can’t help your credibility with the rest who absolutely do.
And by “the rest”, who do I mean? A few miscreants with bad ideas here or there? No. The deflation case remains the baseline even if those in the mainstream refuse to believe the facts (hiding under their mathematical desk). The financial press is uniformly aligned, though little else.
It’s only the former which becomes more certain and therefore increasingly hysterical.
We could be at a generational turning point for finance. Politics, economics, international relations, demography and labor are all shifting to supporting inflation. After more than 40 years of policies that gave priority to the fight against rising prices, investor- and consumer-friendly solutions are becoming less fashionable, not only in the U.S. but in much of the world.
The myths roll so easily off the relaxed tongue comforted by “everyone says.” Well, truth be told, not everyone says this. Not even close.
Quite the contrary, here’s two big ones which absolutely deny this generational stuff; this pair doesn’t even think there’s as much inflation risk as just a few years ago when the risks were practically laughable before turning out to have been entirely false. Do people really not remember the first half of 2018?
While there may be a proliferation of media voices and written pages all extolling the inflationary certitude, these two markets represent an incomprehensibly greater wealth of experience, direct knowledge, and historical grip.
What better duo of inflation seeking and hedging than UST’s and gold?
The fact each is still the mirror of the other this far into 2021 indicates the profound disconnect between mainstream rhetoric and market views of the actual on-the-ground situation. I mean, out-of-control consumer prices is bullion’s big thing, its spotlight claim to fame in the last seventy-five years.
Instead, like bonds, gold trades on the link between opportunity cost and shared perceptions of what’s the big risk going forward. Neither of those point to something like the 1970’s. They don’t even approach the middle 2000’s.
Then again, unlike the headline and leading paragraph, even the Journal guy was smart enough to hedge his own “everything” thesis:
This may be another false alarm, and it will take many years to play out, but the evidence for a general shift is strong across five fronts.
It’s not the boy who cried wolf, it’s the media who calls for inflation time and time again based on the collective bad math of Ben Bernanke then Janet Yellen followed by Jay Powell and yesterday Janet Yellen in her new job. A poorer track record not assembled since, ironically, the seventies.
As I have to keep pointing out, the situation always turns out to be the opposite of these things; in the seventies, they said inflation would be handled and wouldn’t last. It wasn’t handled and it did last. For the past fourteen years, they’ve said inflation will show up to end the disinflationary/deflationary nightmare. Hasn’t yet, not even close and the chances only dwindle with time (see: Japan).
Media stories proliferate while markets seek truth elsewhere. Like early 2018, the everything-screams-inflation is once again getting ridiculous. And it’s just not true; the majority case still piles up against it. This may be just a pair of markets yet they are more everything than anything written up on the internet (including what I’m doing here).