0:00 - Introduction0:33 - Categorizing Inflation4:46 - Commodity Valuations6:00 - CPI Accuracy7:26 - Free Vs. Subsidized9:18 - Inflation & Rates13:00 - Fed Kryptonite16:32 - Gold Standard17:55 - Debt Repayment19:10 - Feds Future Plans21:17 - Commodity Trade22:34 - Fed & Housing Markets24:52 - The Biggest Risk26:56 - Bond & Negative Rates32:18 - The End Game35:46 - Strategies38:17 - Wrap Up
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Tom welcomes a new guest Peter Boockvar of the Bleakley Group, to the show. Peter explains how inflation is affected by technology and production efficiency. These improvements over the past twenty years have helped to keep inflation low. However, the service side of the economy has experienced considerable and consistent inflation.
Today, service inflation is accelerating, and the critical question is where are goods prices going from here. Peter believes that inflation will be longer-lasting and that it's likely to surprise many.
Peter explains how the Fed uses the PCE inflation benchmark when it calculates inflation and why it's inaccurate regarding housing and health care. He argues that basically anything the government subsidizes becomes more expensive.
He explains how persistent inflation could bring serious problems for the Federal Reserve. The dollar is experiencing issues due to the amount of money printing. They realize there is a limit to how much they can stimulate the economy, and Peter won't be surprised if they slow down the stimulus and spending.
A gold standard creates a limit to how much currency can be created because it has to be backed by metal in a vault. Such a standard once helped to hold politicians accountable.
The Fed's plans mean almost nothing, but most likely, they will take a less dovish approach from here.
He expects the bull case for gold and silver to remain intact as the risks of continued high inflation will persist. However, persistent inflation will catch many by surprise and may develop into a black swan event.
It's getting harder and harder to make money in the markets. So there will be a lot more bumps in the road over the next couple of years. He discusses some strategies that Bleakley use to mitigate inflation risks.
Talking Points From This Episode- Technology and production improvements and inflation.- Inflation benchmarks and Federal Reserve plans.- Why persistent inflation will be unexpected and bring further instability.- The End Game for the Fed and strategies to protech and build wealth.
Peter Boockvar is the Chief Investment Officer of Bleakley Financial Group and Editor of The Boock Report newsletter https://boockreport.com/.