Money Monday!

With tremendous amounts of government money being infused into the economy, we are seeing an increase of fear-inducing reports on inflation in the news media. I’ve included a piece from Raymond James Chief Economist Scott Brown where he gives his take on where inflation may be headed.  This article has a lot of detail which certain readers may appreciate. For those who would prefer a high-level summary with bullet points, I pulled a few key messages from Scott’s article:

  • We can expect to see some reflation which is a rebound in certain prices that were depressed during the pandemic, but a broad-based increase in underlying inflation is unlikely.
  • Large federal budget deficits do not cause inflation. We ran huge deficits (as a % of GDP) during the 1980s as inflation fell.
  • Some may worry about a weaker dollar. We shouldn’t see a large drop in the dollar in 2021, but even if we did, the impact on consumer price inflation should be modest at best. Inflation is by far driven more by domestic factors.

Here is a link to Scott’s Inflation Outlook, Part 1 article:

Here is a link to his Inflation Outlook, Part 2:

I will continue to post updates with some thoughts on inflation as this situation develops.



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