Eurodollar University channel's Jeff Snider has an amazing knowledge of the eurodollar system (the real reserve currency system), and the nuances of the banking and monetary system. Jeff, and his friend and frequent guest on his podcasts, Steve Van Metre, have taught me a lot about the financial systems nuts and bolts in recent months. In this interview, Jeff makes the case for coming deflation, instead of another wave of inflation. Yes, DE-flation, as in prices actually going down for a period of time.
I feel pretty stupid listening to Jeff Snider's videos. But after 2-3 months of listening to his daily videos regularly, his insights make more and more sense. In this video he makes the case that the "inflation" we have dealt with is actually the result of a "supply shock," and that now we are into disinflation (prices not rising as fast), and may well be headed for actual "deflation," where prices actually drop overall. It won't be forever, but it looks like inflation is, and quite possibly will continue to decrease in the coming months. Just check out the video.
I'm doing a lot of my writing on Substack these days, check it out:
In the crazy world of 2023 financial markets, this Blockworks Macro's "On the Margin" show interview with Lyn Alden is the best look at inflation I've heard. Blockworks Macro has a YouTube channel where three guys interview all kinds of people on economics, investing, and crypto. Lyn Alden is a researcher of economic and investment data, and you can find her work, and read some free articles, at lynalden.com .
This interview starts with Lyn explaining that the inflation problem now, in the 2020's, is more comparable to the inflation of the 1940's, rather than the 1970's. The interview moves on from there. If you want to understand the whole concept of inflation better, this is a great video/podcast to watch or listen to.
I'm doing a lot of my writing on Substack these days, check it out:
Why is there inflation? Where does it come from? Is our inflation going to go away? Is it going to get worse? In this Blockworks Macro/On the margin interview with Lyn Alden, they go deep into the sources, history, and ways to deal with inflation.
What's the future of inflation? Being a futurist/economics geek, I watch several hours of financial videos a week. Not way off conspiracy stuff, but the serious financial bloggers. There's a ton of good information and opinions out there. But the economy is in never neverland these days, after all the chaos of 2019-2023. So there are a lot of smart people, with different backgrounds, trying to make sense of today's wacky economic world.
My take on inflation is that we will see the official CPI inflation number drop down more, over the next several months. On one hand, it's cool to see the inflation rate go down. On the other hand, I think it's going to continue to drop because of our slide into a major recession. The official CPI inflation rate peaked at 9% annually, several months ago. The rise in interest rates has helped slow the economy, and the official CPI rate is 4% now. I think the credit crunch (banks holding back on giving loans) will steepen this coming recession, and the CPI rate will likely drop down to 2% to 3%, and maybe even go negative, by early 2024. But the cost is a gnarly recession, lots more people losing jobs, and hard times for most of us.
So it appears now there will be a severe recession soon, and the slowdown in real estate, consumer spending, and other areas, will drive inflation down quite a bit more. Home prices are dropping in several areas, rents may drop some in many areas, and cars, collectibles, and even gas prices will probably drop in many areas over the next several months. Food prices will probably stay elevated.
Looking at a longer term picture, the government is already bailing out the banking system with the BFTP program, and we will see more bailouts to the banking system, with new money being created and surged into banking, financial markets, corporate and treasury bonds, but not to us average people. This money will... you guessed it... help create more inflation down 12-18 months from now, and beyond that.
So the most likely scenario looks like falling CPI inflation, overall, for the next 6-9 months maybe. It will probably hit bottom in early to mid 2024. But then the recent bailout money, and more bailouts ahead, plus other major factors (like continued deficit spending by the U.S.) will send inflation rising again. The next rise in inflation should begin mid to late 2024, and continue well into 2025, and beyond. That appears to be the most likely scenario from here, all combined with The Fed lowering interest rates in late 2023 and/or 2024, and a really serious recession. This is my personal opinion on it. Do your own research, and listen to the video above to come to your own conclusions.
