Insightful Investor #86 - Jason Thomas: Inflation, AI Economics, Tariffs, Private Markets
Sep 2, 2025
In this discussion, Jason Thomas, Head of Global Research and Investment Strategy at Carlyle, shares insights on the new regime of persistent inflation and its implications for portfolio diversification. He highlights the dynamic economic impact of AI, noting its substantial contribution to GDP growth. Jason delves into the evolving roles of private markets and credit, advocating for a focus on inflation-hedged assets like infrastructure. He also examines the effects of tariffs, market concentration risks, and the importance of adapting investment strategies amidst changing economic landscapes.
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Persistent New Inflation Regime
- Jason Thomas argues we are in a new inflation regime with persistent above-target inflation over multiple years.
- Core inflation measures have averaged ~3% over 18 months, showing intractable price pressures.
Fiscal Dominance And Hidden Costs
- Fiscal dominance risk arises when fiscal deficits press the central bank to monetize debt and erode real returns.
- Accepting higher inflation would transfer wealth from bondholders to the government and risks recurring capital losses.
Deficits Show Through Inflation Then Yields
- Large deficits can first show up as inflation and later as higher yields if investors doubt real principal value.
- Rising yields increase interest costs and can worsen fiscal dynamics in a slow-moving process.