Cents and Sensibility: the Inflation Guy Podcast

Okay, buckle up because the Inflation Guy here is going to cover some big-time concepts. Wayyyy back in 2003, some guys named Jarrow and Yildirim explained how inflation acts just like foreign exchange, except not foreign and not on an exchange. No, no, stay with me here. Turns out they were right, and a lot of what is happening today - and the mistakes in interpretation that are being made - can be understood if you understand tha...

Every once in a while, it is a good rigor to take all of those sticky notes that festoon your desk and put them into one, organized, document. At least, that's what the Inflation Guy tells himself. On the other hand, they say 'a clean desk means someone else is in charge.' Still, it was getting to be a fire hazard.

In this episode, the Inflation Guy tackles a few disparate stories and recent trends that seem to have an overarching ...

Another month, another above-consensus CPI print. The Inflation Guy tears into the data like a feral cat, ripping away the fatty bits to get at the meaty part. Okay, maybe that was too graphic. Anyway, this cat points to several signs in this month's inflation report that inflation is starting to get 'sticky' at a higher level than we'd like it to, and the recent inflation deceleration is going to get more difficult going forward. ...

Both gold and crypto are occasionally put forth by promoters as having inflation-hedging qualities. Which of these has a better claim? Or are they both 'real assets' that can help you defend your money?

Now that mutual funds and ETFs are launching seemingly weekly to hold BTC and other forms of crypto, 'democratizing access' to this 'asset class,' it is worth asking whether these funds are securities that should be included in ever...

This somewhat longer episode has a little bit of potpourri at the beginning, as the Inflation Guy covers the OER-Primary Rents divergence, the decline of Reverse RP balances, and the effect of AI on inflation...but the meat of the podcast is a discussion about a product (which a listener sent to the Inflation Guy) that resembles an inflation-linked annuity but in a mutual fund form. There are pros and cons to the product, and the I...

When your grandpa turns 100, you're going to hear stories. It just goes with the territory. When a podcast has its 100th episode, same deal.

Grandpa Inflation Guy actually manages to keep the stories to a minimum, while reporting on a recent conversation he has had about a development in the health care inflation space and giving some optimistic readings about the future to the gathered listeners.

Now for some cake!

NOTES

Podcast c...

Welllll...so much for the idea that, since the 3-month average of CPI was down at 1.90%, the Fed could ease in March! This month's inflation print was, to use a technical term, broadly icky. The Inflation Guy tells you why.

NOTES

Podcast callback: Ep. 98: Will You Be Able to Trade Medical Care Inflation Soon?

Blog Post: Inflation Guy’s CPI Summary (Jan 2024)

Blog Post: Inflation Sherpa

To Subscribe to Quarterly Inflation Outlook:...

The Inflation Guy for a long time has had a "bee in his bonnet" (seriously, who uses this phrase? Or owns a bonnet?) about the need for more tools to trade inflation and, especially, subcomponents of inflation like medical care. In this episode, after giving a quick preview of next week's CPI report he turns to a discussion of IMX, a new futures exchange that has expressed an intention to trade instruments related to medical care. ...

The Inflation Guy sometimes gets distracted by shiny things. Today, he was distracted by an article sent from a listener, detailing comments from the CFO of Travelers Insurance about the increased reinsurance the company is employing as a hedge against inflation risks to its property and casualty (P&C) businesses.

This is an illuminating comment, showing both that (a) insurance costs are going up not just because insured proper...

"Money Illusion" sounds like the sort of thing your economics teacher droned on and on about, causing you to yearn for a nice nap during class. But is it a real thing? And if it is...why does it matter?

In this episode, the Inflation Guy explains money illusion, presenting some of the evidence that it is (at least some of the time) a real phenomenon. He uses current observations where you can see money illusion at work, and then ex...

In this (longer than normal) episode, the Inflation Guy talks about the outlook for inflation - which, admittedly, he did last week with the CPI Summary episode but in this case he delves into more of the drivers of his 2024 and 2025 expectations - and for several asset markets. He frames the question as a balance of the risks and makes concrete suggestions for how he would tilt portfolios today.

Also, in response to listener reque...

It's 2024, a fresh start to what is surely going to prove to be a golden year and the end to history! The SEC has approved bitcoin ETFs, the Fed is dovish and achieved a perfect landing, rates have come down a ton, and everything is beautiful.

At least, as long as inflation really does collapse immediately to 2%, as the consensus seems to suggest. Unfortunately, reality has a way of intruding in these sweet dreams and today's CPI r...

It's the monthly CPI report! In this podcast, the Inflation Guy discusses today's economic data and highlights why the market's expectations for substantial easing in 2024 sets up a difficult path forward. He discusses several ways that inflation could get back to target, and then what needs to happen with policy to make that happen.

Hint: it isn't what the market is pricing right now.

NOTES

Blog Callback: Beware the Price Control...

The notion of a 'safe withdrawal rate,' being a real amount that can be taken out of savings in retirement each year without a significant risk of running out of money in some window of time, goes back to a 1994 paper by Bengen which enshrined the "4-percent rule." In this podcast, the Inflation Guy discusses improvements to that rule - including some that he popularized - especially when it comes to the need to add some inflation-...

In this episode, the Inflation Guy considers the question of why college tuition inflation has consistently run drastically faster than headline inflation. Is it a productivity question, or a quality question? And what does 'quality' mean in the context of college education? There are a lot of complex issues to be considered here, which ordinarily would mean you shouldn't ask someone who does his best thinking in the shower, but be...

This month's CPI report was softer than expected, which is welcome. And there were some quantitative effects in the data which (while expected in the big picture sense) are encouraging. However, a lot of the improvement this month were from fairly obvious one-off categories that moved in the opposite direction from what third-party surveys (for example) were suggesting they would - and most of these will end up being paid back in a...

The Inflation Guy has a little thing about risk. Not merely avoiding it, and certainly not seeking it - but counting it. By carefully decomposing risks into component parts, a portfolio manager can be better prepared for the sorts of risks that can befall a portfolio and also find cheaper ways to express the sorts of risk that he or she wants to have in that portfolio. In this episode, the IG talks about how he thinks of risks, and...

This morning's Payrolls Report was weaker-than-expected; among other things it included an increase in the Unemployment Rate to 3.9% - fully 1/2% higher than April's low for that number. Does this mean that we are going to have slower wage growth, and slower inflation? Or possibly one of those and not the other?

And what does it mean for growth? The Inflation Guy reviews the historical record of prior periods when the Unemployment ...

In this too-late-in-the-week episode of Cents and Sensibility, the Inflation Guy takes on supply and demand curves, market clearing prices and quantities, and says you're doing it all wrong.

It's more nuanced than that, but they charge us by the word for these summaries.

NOTES

Blog Callback: “Shortages are Unmeasured Inflation” https://inflationguy.blog/2021/10/24/shortages-are-unmeasured-inflation/  

Blog Callback: “Enough With In...