Wednesday, March 10, 2010

"It's Going to be Inflation Everywhere"

In seeming contradiction with his boss, Nouriel Roubini, Arun Motianey, director of fixed income strategy at Roubini's RBG Capital, is expecting worldwide inflation.

Roubini is currently bearish on gold.

"We're heading into a world of inflation because we are highly indebted and we are indebted here in the US economy in the household sector and in the financial sector," Motianey told CNBC.

Central banks "have to start letting inflation into the system," he added.

Why Motianey fails to mention government debt as an inflation catalyst, is not clear. Perhaps he includes it in "financial" debt. Be that as it may, it is government debt that is the likely catalyst for inflation, certainly not household debt. Bernanke is not going to start the inflation engines so it becomes easier for households to pay down their debt.

On a long term basis, Montianey is likely correct about the inflation. As of right now, it must be noted, that China is inflating its currency, but the same can not be said about the Federal Reserve.

The inflation will come. It's just very early in the game.


  1. Looks like Sun Tzu's tactic of disinformation.

    All you have to do is figure out who's the liar, the head or the neck.

  2. More like a variation of "somebody else's" hallmark tactic of hammer and anvil:
    1. Give the subject strong conflicting cues.
    2. Take advantage of confused subject.