Palisades Gold Radio: Supply Shortages are Masking Real Inflation (w/ Lyn Alden)


Palisades Gold Radio
Nov 11, 2021

Tom welcomes Lyn Alden, Financial Newsletter Editor & Publisher, back to the show.

Lyn discusses the massive increase in money printing coupled with shortages in goods and commodities. Prices have experienced disinflation due to globalization for a considerable period and now that is ending. The CPI metrics include hedonic adjustments that are masking some of the inflation in goods.

Lyn discusses the bottlenecks being created due to semiconductor shortages. Semiconductors are essential and shortages are having an outsized effect on the production of vehicles for example. Factories that produce semiconductors are expensive and therefore new supply takes time.

Energy is often directly correlated with inflation. Lyn discusses why fossil fuels will remain important. She notes that the world has never phased out an energy source but simply added new forms to the existing paradigm. We still use coal and biomass globally. Wind and solar work well for augmenting the grid but become challenging when the weather is calm and cloudy. Grid-scale energy storage solutions so far are resource-intensive and remain impractical. However, there has been an uptick in interest in nuclear energy which is hopeful.

Inflation today is not uniform as some countries like Japan that have not printed money recklessly are doing okay.

Value stocks tend to outperform growth stocks in periods of weak economic activity. This trend generally shifts around recessions and changes in monetary policy.

Lyn expects the Feds’ policy to remain largely the same and much will depend on the fiscal policy of the U.S. government. She believes they will be successful at tapering for a while. What will be interesting is their choice of policy when we reach the next crisis.

Lyn discusses the economic similarities of the present to that of the 1940s. Inflation will likely move in pulses and will include periods of deflation.


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