Tony Ogorek and Jeff Viksjo discussed concerns over rising inflation in a recent webinar.
Hi I’m Tony Ogorek, I’m the Founder and President of Ogorek Wealth, and Jeff is our Portfolio Manager. Today we are going to be taking a look at a hot topic, which is inflation.
We can start with our first slide, and here we are looking at a National poll asking that very same question, how concerned are you that inflation will climb? And the results are pretty surprising here: 55% say very concerned, 29% say somewhat concerned, and then only 15% say not very or not at all concerned. One thing we should mention is this poll is from 2010. So, why are we showing a poll from 2010? The reason is that environment was very similar to what we have today. We were just coming back from the Great Recession. There was big stimulus spent by the Federal Government, we thought it was big at the time now it’s been dwarfed by what we’ve done with COVID. Certainly, there were some high prints on inflation. Right away we saw a 4% number, I believe in 2008. And the concern was ‘watch out, we’re going to have hyper-inflation over the next decade, this could be bad’. Of course we know that didn’t happen. We didn’t have hyper-inflation, and Tony we couldn’t even get inflation to 2%.
Jeff that is true. You have to understand that rarely have we seen a level of stimulus that we’ve had over the past decade. So you’ve had deficits, Federal deficits, approaching a trillion dollars a year; that is with 12 zeros. We also have monetary policy, or interest rates, drop to very, very low levels. And we’ve had the Fed, what we call expanding its balance sheet, it’s artificially buying bonds in order to keep interest rates down. You can’t get much more stimulative than that, and still inflation has had a tough time just getting to 2%. It’s probably averaging about 1.5%. So, we’ve seen this story before. Our feeling is we’re going to see a repeat of it, although it may extend out for another year or so before we see an attenuation of rates and inflation.