Danielle DiMartino Booth: Inflation Hitting from Every Angle

Tom welcomes back Danielle DiMartino Booth, CEO and Chief Strategist for Quill Intelligence, a research, and analytics firm.Show more

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America is a very indebted country, including American households, corporations, and the national debt itself. Servicing all this debt is only possible because the Fed has been able to keep bond yields near zero.

She outlines some of the inflation and trade problems last year combined with the massive amounts of stimulus. Stimulus programs and extended unemployment benefits have resulted in rising home prices, vehicle prices, and a considerable spike in revolving credit card debt.

A year ago, we had millions of hospitality jobs lost, and she believes there will be other adverse effects on wages. People are staying out of the workforce because of various unemployment benefits, resulting in unintended consequences for businesses.

Danielle discusses some of the systemic issues with the CPI. Certain hedonic adjustments may be valid, but they are under-reporting health and housing expenses.

Solving debt with more debt is probably not the optimal strategy. The Fed could have taken advantage of the pandemic to use QE; instead, they bailed out the bond markets. They should have used the crisis to purge inefficient and over-leveraged zombie corporations.

Monetary policy widens the inequality in the system, and the Fed's tools are too broad. These policies only exacerbate the problem by flooding wealth into the top percentile.

Danielle outlines possible negative effects of central bank digital currencies and why the Fed is reluctant due to dollar risks. Globally, there has been a slow move away from the dollar, but it still the leading trade currency.

Janet Yellen, as Treasury head, is a problem because she is inadvertently helping Wall Street. Janet believes in trickle-down economics, and if he decides to deploy direct helicopter money, this could be very inflationary. Further stimulus programs this year will result in political blowback.

Lastly, Danielle is concerned with the Biden administration's lack of communication skills. Insider selling is through the roof over concerns about higher taxes. What happens if everyone tries to head for an exit.

Time Stamp References:
0:00 - Introduction
0:34 - Bond Yields
1:45 - Inflation & Wages
8:44 - CPI Metrics
10:23 - Inflation Hedges
13:10 - General Risks
15:17 - Alternate Paths?
17:39 - Wealth Inequality
19:16 - Digital Dollar
23:05 - Janet Yellen
26:52 - Capital Gains Taxes
28:50 - Historical Wisdom
29:52 - Wrap Up

Talking Points From This Episode
- Debt, Leverage, and Bond Yields.
- Stimulus and Employment Problems.
- Price to Earnings and Systemic Risk.
- Central Bank Digital Currencies and Dollar Concerns.

Guest Links:
Twitter: https://twitter.com/DiMartinoBooth
Website and Newsletter: https://quillintelligence.com/

Danielle DiMartino Booth is CEO and Chief Strategist for Quill Intelligence LLC, a research and analytics firm.

DiMartino Booth set out to launch a #ResearchRevolution, redefining how market intelligence is conceived and delivered with the goal of not only guiding portfolio managers but promoting financial literacy. To build QI, she brought together a core team of investing veterans in analyzing the trends and providing critical analysis of what drives the markets.

Since its inception, commentary and data from DiMartino Booth's The Daily Feather have appeared in other financial sources such as Bloomberg, CNBC, Fox Business, Institutional Investor, Yahoo Finance, The Wall Street Journal, MarketWatch, Seeking Alpha, TD Ameritrade, TheStreet.com, and more.

A global thought leader on monetary policy, economics, and finance, DiMartino Booth founded Quill Intelligence in 2018. She is the author of FED UP: An Insider's Take on Why the Federal Reserve is Bad for America (Portfolio, Feb 2017), a full-time columnist for Bloomberg View, a business speaker, and a commentator frequently featured on CNBC, Bloomberg, Fox News, Fox Business News, BNN Bloomberg, Yahoo Finance and other major media outlets.

Before Quill, DiMartino Booth spent nine years at the Federal Reserve Bank of Dallas, serving as Advisor to President Richard W. Fisher throughout the financial crisis until his retirement in 2015. Her work at the Fed focused on financial stability and the efficacy of unconventional monetary policy.

DiMartino Booth began her career in New York at Credit Suisse and Donaldson, Lufkin & Jenrette, where she worked in the fixed income, public equity, and private equity markets. DiMartino Booth earned her BBA as a College of Business Scholar at the University of Texas at San Antonio. She holds an MBA in Finance and International Business from the University of Texas at Austin and an MS in Journalism from Columbia University.

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