Thursday, June 11, 2009

Jim Grant on CNBC: get set for inflation

Jim Grant joined CNBC for an in-studio appearance Wednesday and left the network bubbleheads with a few things to think about.

Big topic of discussion: inflation and its appearance in the US following the recent raft of money creation by central banks, the Fed in particular.

Grant notes that many in the US believe that inflation will not flare up due to "excess capacity" in the economy. However, Jim points out that measures of "output gaps" in the economy are not a useful leading indicator of inflation, and he reminds the assembled crowd that inflation is simply a product of "too much money".

At some point, that money will begin to chase something, be it consumer goods, services, commodities, and those price rises will signal the arrival of inflation as measured by CPI.

Always good to hear some thoughts from James Grant, especially since his equally thoughtful contemporaries, Marc Faber and Jim Rogers, have been notably absent from CNBC America lately (probably due to their rather dour outlook on the US).

Hat tip to Todd Sullivan at Value Plays.

Related articles and posts:

1. James Grant on Bloomberg TV - Finance Trends.

2. Federal Reserve audit support surging - Huffington Post.