Monday, December 23, 2013

Inflation: first Joey the Weasel, now guess who!


BI - Rosenberg says "don't be fooled by the deflation hoax". Here's a fun story from Rosie about generational narrative inertia:
I spent the 1980s and 1990s on trading floors with old veterans from the late 1960s and 1970s who had only seen rising inflation and higher bond yields. They knew from nothing else and so it was very tough for them to buy into the disinflation theme and declining interest rates. In the periodic spasms to the upside they would say "Rosie, ya see, inflation is back". You see, they couldn't differentiate between what was cyclical and what was secular. And then I noticed in the 1990s and this past decade-plus, that we have an entirely new crew of bond traders on the desks, the sons, daughters, nephews and nieces of the old guard, who have only known disinflation, deflation, lower (minuscule) bond yields and radical Fed easing cycles. That is all they have known for their entire professional lives. Their elders didn't see the great deflation coming, and the offspring don't see the remote prospect of a moderately higher inflation environment coming at any time on the forecasting horizon. They have become entrenched in the consensus view of demographic strains, excess capacity and demand deficiency (I was there once, but knew when to make the turn).
I find generational narrative inertia to be a satisfactory explanation for things.

But I find it funnier that now even Rosie is starting to mention inflation.

This might become a thing.

Gee, is there some sort of thing that fat ignorant white people on Wall Street typically buy to protect against inflation? Some sort of substance, maybe? Like a yellow metal?

Anyone?

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