Odd Lots Dan Alpert on the Big Difference Between Now and the 1970s
Oct 25, 2021
Dan Alpert, managing partner at Westwood Capital and a Cornell Law School fellow, dives into the intricacies of today's inflation landscape. He distinguishes current inflation from the 1970s, arguing that comparisons often miss key economic changes since then. Alpert discusses the impact of pandemic-related supply chain issues and critiques traditional monetary policies that aim for a stable 2% inflation rate. He highlights the importance of equitable wealth distribution and policy shifts to navigate the challenges posed by evolving economic realities.
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Debunking Monetarist View
- The monetarist view, blaming government deficits for inflation, is weakened by post-1990s low inflation despite large deficits.
- The Nixon shock's devaluation of the dollar and the oil price shocks are more compelling explanations for 1970s inflation.
Volcker's Impact
- Paul Volcker's actions curbed inflation but through aggressive policy, not expectation signaling.
- The current focus on expectations overlooks that Volcker directly intervened by tightening monetary policy.
Wealth and Demographics
- The 1960s saw wage growth exceeding price increases, creating household wealth.
- This, combined with the baby boomers' consumption, fueled demand, contrasting with today's wealth concentration among older generations.