Cents and Sensibility: the Inflation Guy Podcast

Recent data out of China has shown growing stresses in the property market, implying stresses in banking; weakness in the trade balance; and generally disappointing growth. This has led some observers to suggest a deflationary wave is headed our way. In this episode, the Inflation Guy recalls a prior example where weakness in Pacific Rim countries actually provoked acceleration in Western economies, and rising inflation. NOTES: Book: Maestro, My Ass! https://amzn.to/45hhFbP

The US CPI was released today and was a modest positive surprise to expectations that were already pretty optimistic in the sense that economists (and the Inflation Guy) were expecting a low print. In this podcast, the IG breaks down the report and points out the very positive developments...along with some curious quirks that soften the miss. But the big question is, what happens next? And here, the Inflation Guy is less sanguine. He gets specific about why, in this podcast. Tune in, and subscribe! NOTES Pod callback: “Inflation Folk Remedies” Blog callback: “Three Colliding Macro Trends” Blog callback: “Summary of My Post-CPI Tweets (July 2023)” To Subscribe to the Quarterly Inflation Outlook: https://inflationguy.blog/shop/

The Inflation Guy, let's face it, sometimes goes a little off the rails when the topic is inflation and the importance of the inflation lens. In this episode, he compares inflation to the fabric of space-time. Can you imagine? The upshot is that even if you don't know anything about space-time, it is still very important to you - and it is crucially important if you happen to be launching rockets. So if you're launching investment rockets, then the fabric of the price-system-space-time should be very, very important to you. It's a good point. Just seems like he could have said that more succinctly. NOTES Blog callback: “Wimpy’s World” Pod callback: “Ep. 21: Recording for Posterity the Absurdity of Negative Interest Rates” Chart of Enduring Quebec Retiree Inflation strategy vs Qc Retiree Inflation: Thru June 2023

Let's take a big step back. The Inflation Guy spends a lot of time in his podcasts talking about the current CPI figures and fairly short-term considerations. But economic episodes are like books, with rising action, a climax, and falling action - and bigger cycles are like book series (think Harry Potter). As we get closer to the end of this book, we need to think about how the next book advances the plot. The Inflation Guy talks through the current chapters, looks forward to the end of this book, and suggests what he thinks Book 2 will look like. Because inflation is not a book you can put down: you're in it to the end. NOTES Podcast callback: “Ep. 50: What the Money Velocity Comeback Means for Inflation, and Investors” The Inflation Guy's book: “What’s Wrong with Money?: The Biggest Bubble of All” – by the way the price online is absurd. Email inflationguy@enduringinvestments.com and he can sell you out of his own stock. If you're in Europe, try https://www.wiley.com/en-be/What%27s+Wrong+with+Money%3F%3A+The+Biggest+Bubble+of+All-p-9781119191162 Chart of the M/Q and V convergence: https://inflationguy.blog/wp-content/uploads/2023/07/convergence.jpg Link to Trivia Answer Audio: https://www.youtube.com/watch?v=q4-gsdLSSQ0  

There is something between 'snake oil salesmen' and trusted information providers. People giving you folk remedies are generally well-intentioned, but merely lack the background to be truly authoritative about the malady they are trying to cure. So it is with economics, and these days especially with inflation. In this episode, the Inflation Guy gives three current examples of inflation-related advice and popular models that fall into the category of 'inflation folk remedies.' NOTES: Book: This Time is Different: Eight Centuries of Financial Folly by Carmen M Reinhart and Kenneth S Rogoff Podcast callback: “Ep. 72: Chapwood Index vs CPI – Which is the Better Inflation Index?” Article: “This Statistic Could Be Distorting How We Think About Inflation,” New York Times.com Article: “Disentangling Rent Index Differences: Data, Methods, and Scope”, by Brian Adams, Lara Loewenstein, Hugh Montag, and Randal J. Verbrugge Blog Article: “Multivariate Core Trend Inflation”, Federal Reserve Bank of New York

In the monthly analysis of the CPI report, the Inflation Guy reflects on an improving inflation picture while cautioning that it isn't improving quite as much as the surprisingly-awesome core and headline figures today suggested. There were two large outliers that likely won't repeat. That said, it is a positive-enough report that the Fed's presumptive rate hike expected later this month might be deferred. Inflation continues to trend slowly lower, but only slowly - and although the longest journey begins with a single step there are a whole lot of steps ahead before we get to the 2% Promised Land. Notes: Inflation Guy Shop: https://inflationguy.blog/shop/

The Inflation Guy is often asked about the Chapwood Index, which is a non-governmental inflation index that is billed as a “true cost of living index, unlike CPI.” In what ways does this index achieve that goal, and where does it fall short? This episode also serves as another illustration of how the Inflation Guy can go off the rails even when given a simple assignment. Which is better, Chapwood or CPI? See what the Inflation Guy has to say about the matter. Notes: Price Stats (neé Billion Prices Project) https://www.pricestats.com/inflation-series?chart=1837 - an independent (but no longer free) inflation index that the Inflation Guy likes better than the Chapwood Index. Blog article: “Eighth-Grade Math vs Shadowstats” https://inflationguy.blog/2021/05/25/eighth-grade-math-vs-shadowstats/ Podcast callbacks: “Ep. 7: Rents and Sensibility” https://inflationguy.podbean.com/e/ep-7-rents-and-sensibility/ “Ep. 4: The Making of an Inflation Indedx” https://inflationguy.podbean.com/e/inflation-guy-podcast-episode-4-the-making-of-an-inflation-index

The Inflation Guy shows a bit more focus in this episode of the podcast, aiming his comments squarely at endowment CIOs and the OCIOs that serve them. He discussed 5 simple ways that an endowment can improve its inflation-protection allocation. Take the test! If you're already doing all five, you are in the 99th percentile. But if you're not - it's fixable! NOTES: “TIPS, the Dual Duration, and the Pension Plan,” Laurence B. Siegel & M. Barton Waring: https://www.tandfonline.com/doi/abs/10.2469/faj.v60.n5.2656 “TIPS, the Triple Duration, and the OPEB Liability: Hedging Medical Care Inflation in OPEB Plans”, Michael Ashton, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1838545

In this episode, the Inflation Guy confronts the question of "Greedflation." What is it, and is it real? Is inflation all the fault of smelly capitalists? And what is the difference between the consumer's greed, wanting to pay less, and the company's greed, wanting you to pay more? Corporate margins are expanding, along with higher inflation. Does that constitute prima facie evidence of greedflation? The Inflation Guy tackles this too, despite completely butchering the pronunciation of "prima facie." He also mentions the Illuminati. Really, you can't miss this episode.   NOTES Good article: Are greedy corporations causing inflation? The Economist https://www.economist.com/finance-and-economics/2023/04/30/are-greedy-corporations-causing-inflation?giftId=21b1b229-c3bf-4371-bf72-4fd9291cac04 Good book: The Bigness Complex: Industry, Labor, & Government in the American Economy, Walter Adams and James W Brock. https://amzn.to/3NGnmtw Good Movie: “Everything Everywhere All At Once” https://amzn.to/3NjNOrD Good blog post: “Enough with Interest Rats Already” https://inflationguy.blog/2023/06/21/enough-with-interest-rates-already/

In this, the monthly analysis of the CPI report, the Inflation Guy homes in on a couple of reasons that core inflation is staying high, despite widespread forecasts that it should be decelerating more quickly: Rents are still rising at about 6% per year, even though many economists have convinced themselves that rents should decline (despite higher costs for landlords, higher incomes for customers, and higher prices of a substitute), and Wages are still rising at about 6% per year, which tends to lend persistence to core services ex-rents (so-called "Supercore"). There are some positive signs in the data, but even as inflation declines slowly on base effects there are few signs that core inflation is dropping below the 5% or so level it has been around for the last few years. A Fed on hold seems appropriate. Reference: "How Much Do Labor Costs Drive Inflation", Economic Letter, San Francisco Federal Reserve