Cents and Sensibility: the Inflation Guy Podcast

Ep. 24: Home is Where the Hedge Is

How should we think about property - investment property as well as the home you live in or want to buy rather than renting? In this episode, the Inflation Guy breaks down how he thinks about the drivers of value of real estate. This isn't a real estate sales pitch and the IG won't tell you how to choose the best location or how to evaluate the schools. He doesn't know that kind of stuff. What he does know is how real estate functions as a hedge, and what the big macro drivers are that you should pay attention to - especially now.

Ep. 23: Grumpy Old Man Edition

The Inflation Guy gives in to his internal grumpy old man, and talks about a few inflation-related items that are sticking in his 'craw.' Are stocks really an inflation hedge? What does it mean when the Fed says they will do 'whatever it takes'? And why are these kids on my lawn?

Ep. 22: This Month’s CPI Report - Balls in the Air

Another month, another 40+-year high in inflation. 7.9% y/y for headline, 6.4% on core, and we're not yet at the peak. Moreover, the peak is likely to be broader and not sharp, because inflation has infected the whole basket and changed the equilibrium that we are going to recede to. It's as if a juggler has moved from juggling two balls to juggling five; that is a stable equilibrium and will resist moving back. And the Fed is probably going to be careful before upsetting the juggler too much (the Inflation Guy really had to work hard to resist a balls pun).

Ep. 21: Recording for Posterity the Absurdity of Negative Interest Rates

After some brief comments on how the Ukraine-Russia conflict fits into the narrative about rising inflation pressures going forward, the Inflation Guy turns to a phenomenon that will soon be one for the history books, probably never to be seen again: negative nominal interest rates. A theoretical absurdity, this lengthy episode demonstrates that sometimes truth is stranger than fiction - and in the kind of world where money tomorrow is worth more than money today, a lot of our notions about how things should work are turned on their heads. Let's reflect on this now, and appreciate just how bizarre the last five years have been.

Ep. 20: This Month’s CPI Report - The Ongoing Inflation Debate (?)

Core CPI above 6%; headline at 7.5%. 40-year high after 40-year high. What is the 'ongoing inflation debate'? The answers here are pretty simple. If you want fewer birds in your backyard, quit throwing birdseed out there.

Ep. 19: Dual Duration - Why TIPS Are Exactly Half the Story

The Inflation Guy breaks down the topic of "duration," and explains how there is a more thorough and useful way to think about bond risk as consisting of two parts (originally described in a paper by Waring and Siegel in 2004). Inflation Guy illustrates where TIPS live in this framework through the device of a "pastry bond," and explains why this concept is very important for individual and institutional investors alike.

Ep. 18: Cash is an Option Whose Cost is Inflation

Why do we hold cash? For anticipated needs, precautionary requirements, and sometimes because there are no better alternatives. In this episode, the Inflation Guy suggests that the role of cash in a portfolio is also to serve as an option on future opportunity, and the cost of the option is inflation. This has some interesting implications for asset prices and monetary policy effects today.

Ep. 17: This Month’s CPI Report - Are We Volked?

Inflation continues to show broader and deeper, and now is entering the general business and consumer mindset. In this episode, Inflation Guy talks about the idea that year-over-year inflation may peak soon, but probably won't go back to the old 2% level. In the long term? Well, that depends on whether the Fed can channel Paul Volcker, and worry less about breaking eggs and more about whether we can afford eggs.

Ep. 16: The Fundamentals of Risk and Return in Commodities

In this wide-ranging, and yet somehow too-short, episode, the Inflation Guy unpacks what it means to "invest in commodities" - sources of risk and return, and common misconceptions that tend to lead investors astray when thinking about this crucial asset class. Where does the long-run return in a commodity index, and the correlation with inflation, come from? Perhaps you will be surprised at the answer!

Ep. 15: An Interview with Special Guest Milton Friedman

The Inflation Guy welcomes his first guest ever to the Cents and Sensibility Podcast: Nobel Laureate and the OG of monetarism, Dr. Milton Friedman, to talk about the inflation problem. As we wrestle with headline inflation of 7% and core inflation of 5%, it is worth listening to the man whose prescription helped squash the inflation of the 1970s - but whose words today fall on the deaf ears of (supposed) economic sophisticates.