Inflation: Understanding the History [2021]

Part 1 of 2
If there is one adjective we have heard repeatedly in the last year and a half it is “unprecedented”. It has been applied to describe the amount of monetary and fiscal stimulus that’s been poured into the economy. It has been used in relation to the pandemic lockdowns and reopenings, and the record-breaking runs in stock, bonds, real estate, and commodity markets.

Is there no historical precedent for these events?

Who better to ask than this week’s WEALTHTRACK guest, Niall Ferguson? Ferguson has studied booms, busts, the rise and fall of empires, the power of social networks, and catastrophes of all sorts including plagues and pandemics?

He is one of the world's leading historians and an influential commentator on contemporary politics and economics. Ferguson is a Senior Fellow at the Hoover Institution, Stanford University, and at the Belfer Center for Science and International Affairs at Harvard, along with being the author of numerous articles, and a regular columnist for Bloomberg Opinion.

His most recent book is Doom: The Politics of Catastrophe, which analyzes how societies have reacted to crises from the Roman response to the eruption of Mount Vesuvius to how various governments have handled Covid-19.

According to Ferguson, experience has taught him that understanding history does help make us better investors. In this week’s interview, he explains why.

00:00 Hello
00:40 Introduction
02:50 Interview with Niall Ferguson
24:20 Action Point

#inflation #history #economy #NiallFerguson

WEALTHTRACK #1803 broadcast on 07-16-21

Bookshelf:

[JDJONES]

This guys HINDSIGHT is 20/20. Impressive!

[jonathanmagic]

There are so many big egos out there predicting the past!

[freeroamer]

I well remember the inflation in the 70's. A salary increase of 12% hardly raised an eyebrow when inflation was 14! To make matters worse, home loans were going for 19%! Ronald Reagan won a landslide victory over Jimmy Carter in 80. By reelection in 84, the Reagan economy had obtained stability with strong signs of recovery ahead!

[CJinsoo]

fascinating man, great to see him branching off into political risk and investment risk. such difficult topics to forecast, will benefit from a great mind like his.

[vinothv]

Horrible interview - Niall is writing his own history. He didn't predict anything or have any good insights last year. I watched a number of his interviews in the early part of the pandemic. He was shell-shocked like the rest of us. He's trying to get advisory fees by building himself up. Smh

[dipaknadkarni]

Okay Niall,

Please predict the next market downturn.
Thanks.

[PRU]

He lost me when he started to be bias about Bitcoin

[jeffposey]

This guy is SO full of crap. He didn’t make ANY of those predictions in February 2020. Go watch interviews with him from that time. He didn’t have a clue more than anyone else.

[chessdad]

That was interesting the mention of the 1960s as I grew up then and remember the inflation of the 70s.

[jackburton]

Meh History might not repeat itself but it does rhyme. This is not a typical guest I would expect on this type of show. I have a prescient prediction for everyone. Roughly every 7 years there is some sort of exogenous or endogenous shock that will rock the markets and eventually there will be a recovery. Lather rinse repeat. I have been investing for over 40 years and basically it is 7 years up, 2 down and one flat. There saved you 27 minutes of blather. Anyone that says "Bitcoin is a digital gold" needs to be flogged in public.

[frankwiersma]

Using history to predict the markets does not work because you need to know the future to predict the markets not the past.

[jj]

A historian boast about he predicted pandemic. I did so too before Jan 25, 2020 because Lunar New year.
History didn't predict future.
Bitcoin is virtual without real asset to back it up, invented in air. It is the time of opportunitists who jump in to the gambling investment. How did the opportunity come about? See PBS "the power of Fed".

[rocking]

Option on Digital Gold, thanks Niall!

[favjr]

Has a history of being wrong on predicting the future. I would not expect him to be very accurate this time around either.

[kikolatulipe]

I was surprised by his position on Biticoin !

[johnkobialko]

It’s going to take a huge amount of fossil fuel to transition to a new green deal also taking in to consideration both man made and natural disasters like drought, wild fires etc .

[MSINFONOR]

Thank you for your great and interesting programs Consuelo. The fundamentals are there - severe drought for the farmers in the west (farming corn ++), with inflation (Not the “transitory” FED BS), Extreme pricing in the housing market, Delta-variant Covid-19 issues, Federal government money printing (M2), Record high unemployment - yes, it’s a pick and choose because the stock market sure isn’t doing anything! The only concern I hear from this so-called market specialist is growth issues… But there are some very good economist that is truly afraid Of what is happening in the market now

[thomastsakopoulos]

What if bitcoin or cryptocurrency, that the guest believe is "digital gold", or an "option on digital gold" or a "digital asset", which he admits is not money, is literally an intangible, non-existent nothing?

[neviswarren]

Excellent interview. I found the likening to the 60's especially interesting. Thanks.

[KK-pmud]

So Niall believes that inflation driven by a combination of fiscal, monetary, and resources demand from the transition to renewables from the current infrastructure. While the Fed states that inflation will be transitory, history from the 1960s (and LBJ) suggests that inflation will happen this decade and potentially accelerate into next decade.