Giustra's Inflation Bet

Molly Brown: Hey, who thought of the name Titanic. Was it you, Bruce?
Bruce Ismay: Yes, actually. I wanted to convey sheer size. And size means stability, luxury, and, above all, strength.
--Titanic

Interesting comments from billionaire Frank Giustra on inflation. In his view, inflation is a "self-fulfilling prophecy" because policymakers stuck in high spending, high debt situations are unlikely to respond in manners that avert disaster.

"It's like everyone is on the Titanic right now. And they can see the iceberg on the horizon, but the system is too difficult to veer away from that right now because you have special interest groups that are driving policy right now at the government level. And anybody who steps outside that party line is not going to get elected in the 24/7 campaign cycle like we are seeing today."

I clicked thru to another interview with Giustra from last September in which he elaborates his thinking behind his current bet on an inflationary outcome. These remarks are also interesting. Would very much recommend the snippet from 11:10 to 12:35 for a lucid explanation of why/how current policies skew the distribution of wealth in an unnatural manner.

The short version of his explanation is that it is easy to make money during inflation if a) you suppress the price of credit below market, b) you get access to cheap credit, c) borrow a ton of it and buy assets whose prices are not being suppressed by current policy, d) 'educate' the public to accept this type of behavior.

Because it is the path of least resistance to wealth for those with influence, inflation is the odds on bet.