Inflation & The Little Coin That Could

Prices are still going up, unless it's crypto prices, in which case there is only one

Taking a break from the meta-ponies to offer the final transient word on secular trends, while wishing folks a happy Thanksgiving.

Things we think

Inflation and crypto, two easily understood concepts about which there is no debate or equivocation.

Inflation is definitely not-transient

Too much $, not enough stuff

So says Bridgewater, the asset manager renown for its principles. Bridgewater’s claim is that inflation is being driven by outsized consumer demand (i.e. “too much money”) and not supply chain disruptions (i.e. “too little stuff”). It’s also not likely to get better anytime soon.

How do they know?

Well, the data show that we actually have plenty of stuff—output is generally at or above pre-COVID levels. Demand, however, is off-the-charts. Why? Because we’re flush with cash! And why is that? Fiscal and monetary policies have made it so, and neither appears to be changing any time soon. Interest rates are super low (and have been for a while), and the government gave away tons of f…