Is massive inflation just around the corner?
DEAR HARRY: Back in 2009, just after the crash, both of my stockbrokers warned me of massive inflation that was just around the corner. They did it again every time the Federal Reserve eased the money supply. It never happened. I later discovered that this was the view expressed almost uniformly by the Wall Street gurus. Today, one of my brokers still insists that we are vulnerable; the other says nothing. What is going on here?
WHAT HARRY SAYS: This reminds me of the fictional professor invented years ago by some Wharton students (me among them). Professor Foofnik had three principles for economic forecasters: 1) If your prediction fails to come about, change the facts that disprove it. 2) If you cannot change the facts, change the prediction. Almost no one will remember it. 3) If you cannot change either, ignore the situation completely. Your brokers fit into two of these categories.
There are many who will not modify their views, even in the face of clear evidence to the contrary. To them, it's almost an act of faith that more money in circulation leads to inflation with sky-high interest rates. Unfortunately, they think that loud talk, supported by many bucks, will prove their point to folks like you and me. Sure, we've seen price hikes, but nothing like the doomsayers predicted.
Three cheers for Foofnik!
Email Harry Gross at harrygrossDN@gmail.com, or write to him at Daily News, 801 Market St., Philadelphia, Pa. 19107. Harry urges all his readers to give blood. Contact the American Red Cross at 800-Red-Cross.