Inflation Surge Unlikely To Prove Temporary

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Calafia Beach Pundit


  • The Fed is promising to be too easy for too long, and that means the current inflation surge is unlikely to prove temporary. That, in turn, means that interest rates are very likely to rise above expectations.
  • Fiscal policy is dangerously "stimulative." No need for Congress to do anything except get out of the way of the private sector.
  • Cash remains trash, as its purchasing power is being seriously eroded by inflation. Ditto for most fixed-income securities.

A big currency wave swallows the building
Hiroshi Watanabe/DigitalVision via Getty Images

For the time being, I haven't see anything that has changed my mind about what's going on in the economy and the markets.

The Fed is promising to be too easy for too long, and

This article was written by

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Scott Grannis was Chief Economist from 1989 to 2007 at Western Asset Management Company, a Pasadena-based manager of fixed-income funds for institutional investors around the globe. He was a member of Western's Investment Strategy Committee, was responsible for developing the firm's domestic and international outlook, and provided consultation and advice on investment and asset allocation strategies to CFOs, Treasurers, and pension fund managers. He specialized in analysis of Federal Reserve policy and interest rate forecasting, and spearheaded the firm's research into Treasury Inflation Protected Securities (TIPS). Prior to joining Western Asset, he was Senior Economist at the Claremont Economics Institute, an economic forecasting and consulting service headed by John Rutledge, from 1980 to 1986. From 1986 to 1989, he was Principal at Leland O'Brien Rubinstein Associates, a financial services firm that specialized in sophisticated hedging strategies for institutional investors. Visit his blog: Calafia Beach Pundit (

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