Investment Thesis
With the federal government running a huge fiscal deficit in order to fund relief spending and the Federal Reserve creating trillions of dollars to inject into the financial system via asset swaps, many worry that a sustained rise in inflation is just around the corner. But what exactly is inflation? And what causes it?
In what follows, I explain inflation, what causes it, and why even these massive government responses to COVID-19 are not likely to result in a sustained rise in it. There are five primary reasons why we're more likely to