Kevin Hassett on Trump's tariffs (2025)

I don't believe that the tariffs are going to be very inflationary at all.

~ Kevin Hassett, FOX Business interview, 6:10 mark, April 18, 2025

Shaun Rein on trade with China: "I'm hopeful that Trump is going to realize the pragmatism"

I also think that Trump is pragmatic and he's going to see U.S.-China trade eventually is good for the American population.  If you look at it, inflation is a major problem in the United States right now.  Partially it's because what I consider to be an irresponsibly loose monetary policy by the Fed in the last five years during the Covid era where we've added - almost doubled - almost $18 trillion to the American deficit.  Part of it is because of high energy prices from Russia because of the Russia-Ukraine war.  But a large part of it is tariffs.  It's no surprise that there's major inflation in the United States when there's tariffs on $350 billion of Chinese-made goods.

I'm hopeful that Trump is going to realize the pragmatism.  If you look at it, in the United States the average SUV costs $43,000.  The average sedan costs $38,000.  BYD, a Chinese NEV maker, just announced that their $9,000 model.  It's going to have full autonomous driving as good, if not better than Tesla.  Wouldn't it be great for the everyday American is they could buy a $9,000 car from BYD and that would help solve the massive inflation problem that's hitting the United States.

[...]

I'm hopeful that under Trump that an accommodation can be made, that a trade deal can be made.  I'm not sure it's going to happen in year one, I'm not sure it's going to happen in year two or even in year three, but Trump has a pathological need to say that he got a trade deal and he beat the Chinese.  And I think he's going to say that to the American population even if it's not really a defeat of China, but it's more of a win-win deal.

~ Shaun Rein, "Why China Brushes Off Trump's Tariffs," Thinkers Forum, 10:30 mark, March 1, 2025

BYD Seagull EV

Torsten Sløk on policy inflation

We know there has been more deglobalization since 2019, which means more onshoring, friend-shoring, near-shoring, and home-shoring.  That means more production is coming home to the U.S. and Europe, in particular, which means the cost of production is likely to go up.  Generally, deglobalization is inflationary.

Next, the energy transition is a significant investment theme and implies significant costs.  It, too, is broadly inflationary.

Third, we are likely to see more military spending, which is also inflationary.  Spending more on missiles and tanks takes investment away from other productive uses like capital spending.

Fourth, and finally, we could see more restrictions on immigration in both the U.S. and Europe, which is inflationary.

If there is one major economic theme in the next three to five years, it’s the risk that we will see permanent upside pressure on inflation.

~ Torsten Sløk, "The Economy Is Fine. The Market Will Be, Too," Barron's, August 10, 2024

Jim Grant on inflation and war

If there's one sure, history-validated cause of inflation, it's war.  It's the activity, which, if carried on at scale, activates the money-printing presses, propels government spending and up-ends public expectations, all to the end of destroying life, property and, not infrequently, currencies.  Abstracting from a particular casus belli, war is malinvestment on a GDP-level scale, an economic calamity for the loser and no certain boon for the winner.  Yet war is what humanity wages.  We the people (through the agency of our tribes and governments) have fought since time immemorial, and the United Nations won't stop us now.

~ Jim Grant, "Where inflation comes from," Grant's Interest Rate Observer, September 27, 2024

Jim Grant on how interest expense was removed from CPI in 1983

"The Cost of Money Is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly," a scholarly paper published in February by the National Bureau of Economic Research, examines the source of the paradoxical detachment of consumer sentiment, which registered 79.4 on the University of Michigan survey (down from 101 on the eve of the pandemic), from GDP growth, which, in the fourth quarter, printed at an annual rate of 3.4%.

The authors' search leads them to a 1983 overhaul of the Consumer Price Index that eliminated interest expense from the cost of living.  Add it back, and today's inflation data look more like the double-digit shockers that may have cost President Jimmy Carter the White House in 1980.

[...]

"When interest paid is considered as a cost borne by consumers and included in the CPI," write the authors, who include former Treasury Secretary Lawrence H. Summers, "the year-on-year inflation rate increases by one percentage point throughout [2023].  When both personal interest payments and the cost of homeownership are accounted for in the CPI, the [year-over-year] inflation rate increases from 3% to 9% in November..."

~ Jim Grant, "Consumers on the couch," Grant's Interest Rate Observer, April 11, 2024

Whitney George on the impotence of the Fed's inflation-fighting tools

Today, the Fed is attempting to fight structural inflation over which it has no control.  It did not cause the reversal of China from a deflationary force to an inflationary contributor.  The Fed did not cause the political forces behind deglobalization.  And the Fed had nothing to do with decarbonization goals that have resulted in bad energy policies.  The recent historic 75 basis points rate hike and the next hikes that are expected is akin to administering electroshock therapy to a flu patient.

~ Whitney George, Sprott Focus Trust 2022 Semi-Annual Report, July 20, 2022

Kevin Duffy: "Is the inflationary side of the boat getting too crowded?"

Is the inflationary side of the boat getting too crowded?  To quote Wall Street legend Bob Farrell, “When all the experts and forecasts agree, something else is going to happen.”  Some of these fears are justified, but many are overblown, at least for the foreseeable future.  Many factors driving up prices are in fact transitory, while others – namely high energy costs – may take years to fix.  Meanwhile, the Federal Reserve belatedly began addressing the problem by shrinking its balance sheet on June 1. 

Grab your popcorn, the next act in this play is likely to be deflationary.

~ Kevin Duffy, "Breaking Point: The interventionists lose control," The Coffee Can Portfolio, June 15, 2022

Janet Yellen admits she didn't see inflation coming

I was wrong about the path inflation would take.  There have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that at the time I didn’t fully understand.

~ Treasury Secretary Janet Yellen, "Yellen Says ‘I Was Wrong’ Last Year on the Path of US Inflation," Bloomberg, May 31, 2022

Charlie Munger on the rise of Hitler

What brought in Hitler was the combination of the Weimar inflation where they utterly destroyed the savings of the middle class in Germany followed by the Great Depression.  It was a one-two punch.  And Hitler came in - crazy demagogue - with 40% of the votes and pretty soon we had a dictator hell-bent for world war.  So the history [of inflation] is not pleasant.  And Germany was a very advanced and civilized nation, the Germany that Hitler took over.  Now I always say that the interesting thing about that was little Albert Einstein, a little Jewish boy, got his entire primary education with the insistence of the Catholic Church in Germany.  Now that is a very civilized nation.  So if you let your nation deteriorate too much, what you get is a Hitler.

~ Charlie Munger, Yahoo Finance interview with Andy Serwer, 5:00 mark, February 16, 2022

President Biden has hot mic moment on inflation question

Peter Doocy: Do you think inflation is a political liability?

President Biden: It's a great asset.  More inflation.  What a stupid son of a bitch.

~ President Joe Biden, "Fox News' Peter Doocy says Biden 'cleared the air' with him following the 'SOB' insult," Fox News, January 24, 2022

Murray Rothbard on the insidious tax of inflation

Direct, overt taxation raises hackles and can cause revolution; inflationary increases of the money supply can fool the public – its victims – for centuries.

~ Murray Rothbard, The Mystery of Banking

Bill Bonner on complacency about inflation

Bonner: I do think though that this period of, let's say, still calm inflation, this period where prices are going up (and some places they're going up a lot), but they're not going up as we might expect for money printing the way it's going on.  I think that that's a fake out on the part of the whole system.  It leads the Democratic Party - not just the Democrats, but Republicans, too - to think that they can raise that debt ceiling one more time and keep spending, spending, spending.  That is their plan and nobody ever questions it.  Nobody ever really questions, "How does this work?  Where does this money come from?"

Ferris: Where are all the loud voices of dissent about all of this spending?  They're gone.

Bonner: They're gone.  It's all become a political issue, not an economic issue.  Nobody doubts that you can do this from an economic standpoint, but the question is whether you can get away with it politically, which is a whole other issue.

~ Bill Bonner, "Preparing for the 'Zombie Apocalypse' with Bill Bonner," Stansberry Investor Hour, 25:35 mark, September 23, 2021

Time Magazine on Milton Friedman's inflationary advice in the late 1960s

Milton Friedman's opinions have particular weight now because the Nixon Administration has placed great reliance on the policies that he prescribes to deal with the current inflation...  Ironically, Friedman's principal complaint is that the Federal Reserve is overdoing the restraints in its effort to cure inflation.  "If the board continues to keep the growth of money at zero for another two months, I find it hard to see how we can avoid a severe recession," he says.  "The board has made the same mistake that it has made all along. It is going too far in the right direction."

~ Time, December 19, 1969

Janet Yellen: "inflation expectations look quite well contained"

Measures of inflation expectations, I think, look quite well contained over the medium term.  Those expectations are actually the driver of price-setting behavior.  And so it is important that we monitor it carefully, but I believe fundamentally this is something that will settle down.

~ Janet Yellen, Treasury Secretary, interview with CNBC's Sara Eisen, July 15, 2021

Ronald Reagan on inflation

Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.

~ Ronald Reagan, 1978

Charles de Vaulx on the risk of inflation and hyperinflation

Even though I understand why we have all these deflationary forces going on, either due to industry disruptions or some of the monetary policies that are followed,... if I were a wealthy client I want to believe that the ultimate nightmare is inflation, as opposed to deflation or disinflation.  Now don't get me wrong, deflation is not something that's amusing...  Deflation's not easy; companies default.  People always associate gold with inflation, but they forget that gold does very well in deflationary times because gold is not an IOU...  So if you're wealthy and you fear deflation, if you are exceedingly careful about counterparty risk, I think you can do ok.  Conversely, if inflation or hyperinflation comes, it's a lot harder to maintain your wealth in real terms...  I do worry that the next step will be inflation. 

~ Charles de Vaulx, "Charles de Vaulx: Why Value Investing Has Slumped but Will Rebound," 43:00 mark, Morningstar interview, November 20, 2019

Diego Parrilla on limiting exposure to inflation risk

We have a problem with cash, we have a problem with fixed income, and we have a problem with credit, because they are effectively short inflation.

~ Diego Parrilla, "Diego Parrilla On Appreciating the Opportunity Set in 'Antibubbles'," Superinvestors and the Art of Worldly Wisdom, 44:10 mark, April 21, 2021

Paul Krugman doesn't see a return of 1970s inflation

Inflation expectations, it took them a long time to become unanchored in the past. It took not just excessively expansionary policy under Lyndon Johnson, it took two oil shocks that sent inflation temporarily into double digits. It took seriously, seriously irresponsible monetary policy under Arthur Burns. It took a long time to get us to where we were in 1980. It took really more than a decade of screwing things up year after year to get to that past, and I don't think we're going to do that again.

~ Paul Krugman, "Krugman Doesn't See Return of 1970's Inflation," Bloomberg interview, March 19, 2021

Ray Dalio: "Investing in bonds has become stupid"

The economics of investing in bonds (and most financial assets) has become stupid...  Rather than get paid less than inflation why not instead buy stuff — any stuff — that will equal inflation or better?

~ Ray Dalio, "Investing in bonds has ‘become stupid,’ Ray Dalio says. Here’s what he recommends instead," MarketWatch, March 17, 2021

Janet Yellen on fighting inflation (2021)

I've spent many years studying inflation and worrying about inflation.  And I can tell you we have the tools to deal with that risk if it materializes.

~ Janet Yellen, Treasury Secretary, virtually roundtable in Washington, DC, February 5, 2021