FX.co ★ 4% inflation is the new normal; assets that protect against the coming stagflation

According to Adrian Day Asset Management Chairman and CEO Adrian Day, the Fed is a clown by saying it's too late for the regulator to control inflation, and a return to 2% inflation won't happen anytime soon.

Day believes that if the Fed manages to bring inflation down from 8.5 to 5.0 or 4%, they will declare victory. And everyone can forget about 2% inflation.

At the PDAC convention in Toronto, Day said that the US economy will go through a period of stagflation.

The Fed's Fantasy:

Although Fed Chairman Jerome Powell will stick to his tightening promises, Day believes Powell will eventually succumb to pressure. He added that the Fed's talk of 2% inflation for several years is a fantasy.

Day considers claims that inflation is caused by problems with supply chains and geopolitical tensions in Ukraine are incorrect. He explained that inflation is caused by excess money creation, not by the hype about disrupted supply chains.

When asked why the Fed is wrong about inflation, Day replied that the Fed has over 400 PhDs in economics working in the building. The vast majority of them have spent their entire lives at the Fed and are so introverted that they have never been able to make an adequate decision. When a person is running a real business and interest rates are going up, a decision has to be made... The people at the Fed don't need that. They are all working on theory.

Stagflation Assets:

Day predicts stagflation in the US economy. Stagflation is a recession along with high inflation. The last time this happened to the US was in the 1970s.

Day also suggested that investors protect themselves with physical gold, gold shares, energy, and other commodities. He also added that he does not like ETFs.