We Study Billionaires - The Investor’s Podcast Network TIP472: Inflation Masterclass continued W/ Cullen Roche
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Aug 28, 2022 Cullen Roche, an expert in inflation and deflationary trends, shares his insights on the current economic landscape. He discusses why moderate inflation is expected in the coming years and argues that deflation is more likely than hyperinflation. Roche examines the importance of money velocity for inflation and its implications for retirement planning. He highlights how to integrate inflation expectations into investment strategies and evaluates what a deflationary world might entail, providing listeners with thought-provoking economic perspectives.
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COVID-19 Fiscal Response and Inflation
- The COVID-19 fiscal response, with its massive deficits, was the primary driver of high inflation, unlike the financial crisis.
- This fiscal spending, combined with supply chain disruptions and the war in Ukraine, led to a prolonged inflationary period.
Deflation vs. Hyperinflation
- Hyperinflation is unlikely due to specific conditions like corrupt regimes or loss of currency faith, which are currently absent in the U.S.
- The risk of deflation is now higher than hyperinflation, given the aggressive Fed tightening and potential housing market decline.
Deflationary Forces
- Globalization and demographic trends are significant deflationary forces.
- Declining birth rates and reduced immigration can lead to lower economic growth and decreased demand, putting downward pressure on prices.