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yeah you are now forecasting far far worse now we heard from fetcher jerome powell and he's saying that he expects inflation to rise over the year but that would be quote neither particularly large nor persistent and he's saying long term and i quote we think the low inflation dynamics that we've seen for the past 25 years are still intact now peter you have long been sounding the alarm over looming inflation so what do you make of those comments and when do you think we will see that inflation search well you know first of all when you're just going back to bloomberg you know i don't know if you know this but after you know being on bloomberg for years and forecasting the financial crisis after the financial crisis occurred and i was you know proven right they banned me from their heir so i haven't been on bloomberg for close to 10 years i haven't i haven't been on bloomberg uh since 2010 myself so it has been a while i wasn't banned but i guess we both left around about the same time but yeah right so basically you made a lot of correct calls then right and the bloomberg audience is not getting the benefit of hearing my calls now because you know bloomberg itself doesn't doesn't want to you know enable that question audience is yes the kidko audience is going to get much better information uh and and so i would not put any stock into what any fed chairman says because you always have to remember that these guys are there to tell a story and they always want to put a positive spin on everything and even if they're concerned about something they'll never admit it like when ben bernanke was at the fed telling everybody not to worry about the mortgage market subprime was contained he later admitted in an interview after he was no longer fed chair that he didn't really believe that he was just simply trying to advance the administration's uh you know view that everything was great and so he couldn't really speak his mind he kind of had to act as if he was part of the bush administration you know which i thought was a very telling admission that not many people picked up on but i think janet yellen uh or now jerome powell rather at fed yellen's at treasury but i think powell also fancies himself part of that uh abiding administration and so he wants to say positive things he can't say oh i think we're going to have really high inflation because then i mean what is the fed going to do about it well you better raise interest rates you better shrink your money supply you better stop financing all these stimulus bills so in order to validate their easy money policy powell basically has to say that any increases that we experience in consumer prices are just a temporary aberration it's transitory and don't worry about it but i don't think that's the case at all i think that what we're seeing now is the beginning of a very very big acceleration in u.s consumer prices uh you know powell may think it's contained to a transitory event but it's not it's as much contained as the subprime crisis was contained and i think the low inflation that we've enjoyed over the last 20 25 years i think a lot of that is through sleight of hand i think that the cpi has actually gone you know has not really reflected the extent to which prices have gone up uh so i think we're understating the increase in consumer prices but i think a lot of the temporary factors that were kind of mitigating the increases because america was able to run these huge trade deficits we were able to export our dollars to countries like china and china would warehouse the dollars recycle them into u.s treasuries and then replace them with consumer goods the chinese were producing all these low-cost consumer goods for americans to buy and the rest of the world was was helping out and so these factors were mitigating uh consumer prices plus a lot of the liquidity the inflation that the fed was creating it went into the stock market it went into the real estate market you know in the cryptocurrency market uh you know into the bond market so i think a lot of these bubbles as they deflate the money is ultimately going to go into consumer prices commodities and things like that and so we're going to we're about to see a tsunami of inflation and you know whether the fed is oblivious to it or just lying about it you know there's no way to know well you know speaking of cpi again hawking back to my past i recall one of your very colorful analogies that stuck with me and you said that having the government control the cpi data is like having the mob give a report on crime so very effective messaging there certainly gets the point across so okay so given we can't really trust the government with regards to the accuracy of where inflation is and where consumer prices are really headed what do you use to make your assessment to figure out what the real rate of inflation is and you say we're headed for tsunami of inflation when i mean that is the big question peter when yeah well to not in my mind i think it's already started you can look at some of these price increases and they're very spectacular and uh you know they're just starting to work their way through the system and again i don't think we're transitioning uh or it's transitory unless you're saying we're transitioning from low inflation to high inflation which is uh really what's happening but what you want to look at to understand inflation is you look at the money supply because it's the money supply that is was being inflated i mean literally that's where the word comes from inflation is to expand you inflate right when something is inflated it expands prices don't expand they go up they go down but they don't expand it's money supply that expands and we have the most expansionary monetary policy in u.s history and no other era is even close to what we're doing right now so this is massive inflation and so to expect that prices are not going to respond by rising uh is is ridiculous but then you also have to look at the supply side of the equation because as the federal reserve is dumping all this newly printed money onto the economy there's actually less stuff for people to buy because more and more people who used to be engaged in productive activities whether they were producing goods or providing services a lot of these people are now sitting at home collecting uh these government checks so we're creating more money to buy goods but we're producing fewer goods to buy and so how can prices not go way up i mean anybody who doesn't think that price are going to go up i mean just not only don't they understand basic economics they just don't even have any common sense
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