![]() The dollar can have a detrimental effect on other currencies, with Turkey and Lebanon being recent examples. The global demand for dollars is tied to oil, and there is a regular cycle based on fiscal policy. We’ve been in a free-floating currency rate system since the 1970s, and we may be entering another dollar bear market. Gold can be a hedge against negative real yields, and the timing for the next gold move will track real rates. We just had the largest year-on-year growth of the money supply since World War II. She discusses the impacts of growing base money and stimulus. ![]() The question will be how difficult it will be to reduce it. The Fed plans to overshoot its 2% inflation target for a period of a few months. CPI metrics are relatively inaccurate due to quality adjustments and lack of important factors like housing, healthcare, and food. Some commodities may stay at new levels and might not fall much overall. Several factors could affect the CPI, including increased commodity demand globally. Lyn explains how year-on-year data can be misleading and why in Q3, the statistics will appear to worsen. We offshored a lot of our manufacturing, and there are several feedback loops driving equity valuations higher as a result. We’ve been in a secular bull market since the 1980s and have built a significant trade imbalance. It will be important to watch the planned infrastructure spending because that will impact some sectors of the economy. The various stimulus programs and changes in people’s behavior have caused supply shocks in lumber and electronics. This should change as these benefits run out. Many of the additional unemployment benefits have been problematic for getting back lower-paid workers. Unemployment is understated because some have stopped looking for work. However, it’s going to take a while to come back to previous levels. Lyn discusses the labor market and how it snapped back somewhat last year. ![]() Tom welcomes Lyn Alden, Financial Newsletter Editor & Publisher, back to the show. ![]()
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