Inflation? Maybe Not.

David R. Kotok
Thu Oct 7, 2021

The inflation hawks cite numerous price indices or monetary policy or rising wages to argue their case. The counterpoint is usually that all this inflation is a result of COVID shock effects, and therefore it is “transitory.” Some argue that the deflationary forces which persisted for years will resume after the transitory period ends. Our personal view is that it is too soon to know, because the COVID shock is not over, and the long-haul COVID shock is just beginning. That said, we lean toward transitory inflation as we examine history and see that every pandemic was followed by a recession and a decline in real interest rates even as post-pandemic wages rose, because there were fewer workers alive and able-bodied.
Recently, we listened to a webinar about the inflation issue sponsored by Caldwell Trust. Don Luskin makes an articulate case for “transitory.” It is worth a listen, so here’s the link:



We thank Kelly Caldwell, Jr., for obtaining Don Luskin’s permission and agreeing to share this informative session.
Disclosure: Cumberland provides an ETF model to Caldwell Trust for use in certain accounts in custody at Caldwell. Some Cumberland employees use Caldwell Trust’s services for their personal accounts.

David R. Kotok
Chairman of the Board & Chief Investment Officer
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