The Central Banks Have Created The Inflation Monster

The central banks have created this inflation monster, and the central banks are not going to be able to control it. Here’s what it means for Main Street…

Michael Lebowitz interviewed by Jason Burack on Wall St for Main St

During this 40+ minute interview, Jason asks Michael about the recent explosion both up and down in the VIX and if that means that more asset price volatility is here to stay?

Michael thinks that volatility will most likely not go back to the last few years of historically low levels but that the large crowd of financial professionals who were trying to money money off the leveraged short volatility trade will not give up the trade so easily without further pain.

Michael thinks central banks and the “buy the dip” crowd on Wall St have helped the leveraged short volatility trade remain profitable for so long.

Jason also asks Michael about his opinion of the global macro situation and stock market valuations. Michael says that this is the most overvalued stock market in US history besides the late 1800s.

Jason also asks Michael about large cap dividend companies like McDonald’s (NYSE:MCD) trading at over 25 times earnings and how McDonald’s has increased its debt by 120% the last few years to do massive amounts of stock buybacks moving the stock price a lot higher…

To wrap up the interview, Jason asks Michael about his newest article about massive budget deficits…

Michael thinks that while the bond bull market is not over in his opinion that exploding budget deficits in the US and credit bubbles in other countries from central banks mean that more inflation is higher and a lot more inflation is coming. Michael doesn’t think central banks can stop the inflation so the central banks will have to live with the consequences of the (inflation) monster they created.

Jason and Michael also discuss asset allocation strategies and why the conventional Modern Portfolio Theory (MPT) of owning only stocks and bonds in different percentages will probably hurt you financially in the future.

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