Chris Farrell, Bloomberg Businessweek

Go to Chris Farrell he's gonna talk to us about inflation Chris is reporter and writer over at Bloomberg business week. Crystal wanted to compliment you on your inflation article I thought it was terrific the one you probably -- last week Trent. Yes thank you very much great article and end. You don't beat the mindset and I got -- I've fallen. I've I've I'm partial to this odd way of thinking is while that did the deal we're at a risk of very high rates of inflation. You're article explains all the reasons that that's probably not going to occur for another ten years. Right -- every once it has just been puzzling because we've heard over and over again right up inflation is just around the corner all this quantitative easing and all these extraordinary measures. And the numbers just keep coming in lower and lower but more importantly when you look at something like tips treasury inflation protected securities and you're investors are risking their money. And they're making a better over the next five to ten years. And what they're saying it inflation's gonna average about 2%. So we know the market is only rightly right -- -- really feel respected. You have to respect it -- and so that was the Genesis of the story why is this why is that. And what it comes out too is I think if you boil it down these bond market vigilantes the hard boiled traders yup there's an enormous faith in US institution. You know you don't worry air Sakura friend of mine who's an economist he said -- -- one of the major contributors to a lack of inflation will be a lack of demand he said growth is so slow and -- thinks at this slow growth rate that we have now not just here in the United States but worldwide. He thinks slot China's -- slowdown Brazil's gonna slow down. That if there's no growth there's no demand right and if there's no demand why -- prices gonna go. -- to your company and you're looking at just what you're describing -- near Oslo Candace Mary you're giving your workers in the pay raises. You know doing a lot of hiring. So are you taking out two you know that the magic marker and you're you're increasing your prices by 10% yeah you know pricing power in this market and I think that was actually the -- But the Consumer Price Index when it came out what two weeks ago now let's. With that companies don't have pricing power just in the environment you're security you're describing. Even with gasoline price you raise the price for gasoline is getting up to close to four bucks a gallon right and what happens consumption drops off people just -- As yet admitted it's been dropping Greek people are driving less and out word. You know would -- it it it it comes right out your budget this on the meant that you see right away to people are very responsive to prices. You one thing that I eight -- I may disagree with in your assumption is that you assume that congress is competent and that there'll actually be entitlement report. I I I'm of the mindset that the senate in and congress is not confident they act like they it just boggles my mind if they haven't done thus far. So if if they don't do entitlement reform I'll talk about the Big Three year aid to -- Social Security say end and and Medicare they don't do entitlement reform. Is your theory out the window. No it up to the -- is completely out the window but what they do you think is that it relies on. What the Federal Reserve does because the lesson William silver's new book biography of Paul Volcker the legendary central banker as well -- that. Although producer of -- that I love Paul -- forced to Reagan to be Reagan. Good Reagan came minutes of fiscal conservatives. And then you ended up this huge budget deficit deal but if you actually look at Reagan and you know did a number of moves later on in this administration. To sort of tackle that. Because -- didn't monetize the debt is bad. Is really tough to do because you have a lot of people screaming at you you're gonna have a lot of people but that's the out if congress. If if Ben Bernanke or success certain monetizes the debt. Congress is just gonna do exactly what you said -- gonna get away with it ranks right breaks a success but if they don't monetize the debt and real interest rates interest rates adjusted for inflation are going up so. Slid steadily on monetize the debt. So monetize the debt means that you sort of you wouldn't wait I sat at the problem -- you say you know what we got all this -- you know what we're gonna do we couldn't wait herself so the problem and then. Congress can kind of complain but they don't have to -- do anything but don't monetize the debt and all of a sudden businesses are facing. Real interest rates interest rates adjusted for inflation of five to seven. 8%. They start screaming and -- Great great while this is it's going to be interesting to watch curse they're mean it could be a hard time if it is sounds like. You're your prediction of low inflation which people look at they say -- that's a good thing. Well it's it's really because the economy's gonna stink for a long long time. And wish you would otherwise I really do need to -- little inflation probably wouldn't be a bad thing in this right now. Now all right well Chris thanks your time appreciating great article really do well or well thought out. Thank you very much all right that's Chris Farrell from Bloomberg business week -- cut that article or not -- but it was -- it was. You know I read -- like wow this guy. Is hit -- all cylinders he knows what he's talked about who's a really. They're great peace now an increase. You know quite the sense of humor and on the campaign had a good save clapping and everything you ask him which is pretty funny. But it ending is that -- now -- -- the one -- can't tolerate or text question of the day is what do you think women should be allowed to golf I did have decided shouldn't even be dead just dead at Augusta should -- mobile home they should be other babies have you -- golf for the woman I -- a traumatic experience and tell you I had with my golf experience. I'd I'd golfed with my two cousins right -- Canadian differences veteran. And they're both athletes -- to come from a really athletic family. They are hitting from the same teases me. And they kicked clients and in golf so I ever since that I've been traumatized. By gulf of golf that's -- these days away now -- is now -- customs and it so what's the problem with -- I I know I have you ever talk too much that's why are you just never shut up your rotator cuff and we're stuck behind. And I know I have a couple of female friends that could. Probably GQ but all of our. Well you can't get -- -- 200 yards off the tee up I'm I'm pretty impressed by that date is that true -- it really drive the ball I can confirm that I I beat my date over the weekend darts. So no wonder you had a difficulty holding onto him and let you guys -- you might make a -- the other him so you know but all right so that. A lot of checks coming in your -- -- you wanna go off monies -- give -- -- actually wanna get to Jason Mosher from the -- fool. He's got some stock picks for you you get a pen and paper because as always -- stock talk coming up and then sometime -- have to figure out woody is here -- -- -- to CBS or they did drug store gift card marriage. How you do -- -- treated audience. And end and I noticed it 68680s are technically maybe a cash -- -- don't know about that -- do you have one of those that if I can find one pretend you don't have much time. -- -- -- -- -- -- -- will be right back with more on the financial exchange.