- Michael Livian, CFA and Martin Fridson, CFA
Inflation or Deflation: The Great Debate
The unprecedented Covid-19 monetary and fiscal stimuli (almost 25% of US GDP, according to some calculations) are awakening investors' fears of hyperinflation and currency debasement.
Our team's analysis, presented in our webinar "Inflation or Deflation: The Great Debate" (Sep 23, 2020), shows why investors should not worry about inflation anytime soon.
Strong deflationary forces are likely to have the upper hand in the near-term. The large government CARES Act was a "one-off", it simply replaced lost income but it did not stimulate demand. Fed's printing press alone will not generate inflation, unless "money velocity" increases. Possible future government actions may become inflationary, but there is very limited supporting evidence today.
Please read our presentation and paper below to also identify the best hedges, should inflation rear back its ugly head!