“There’s one of the sure things we know about macroeconomists is that they can’t forecast.”
That’s what renowned Princeton economist Dr. Malkiel Burton had to say about inflation when he sat down with TheStreet’s editor in chief Sara Silverstein. Given his stance, he also doled out some advice to investors given the unpredictability of the economy.
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FULL VIDEO TRANSCRIPT BELOW:
Sara Silverstein: Great and just a final question. What do you think about where inflation is? Do you think we are potentially in a position like we are in the 70s of persistent inflation and a flat market? Or I mean, how does that how does inflation fit into your thesis moving forward?
Dr. Burton Malkiel: Well, we’ve obviously had very good, very good inflation numbers. And let me say the following about inflation. There’s one of the sure things we know about macroeconomists is that they can’t forecast. Economists have been dead wrong about the outbreak of inflation and predicting it over their entire history. The federal reserve, which controls the money supply, they can’t predict inflation. As you know, the Board of Governors of the Federal Reserve System has something that they call dot plots, where the governors indicate where they think inflation will be. And even though they’re controlling interest rates, where they think interest rates are going to be six months from now, nine months from now, a year from now, et cetera, they can’t do it.
But again, what it suggests to me also is that investors should not be investing based on their expectations about inflation, about stock prices or anything else that they can’t predict. And I’m basically somewhat agnostic about inflation. I’m not quite as optimistic as many people are that we’ve got it completely solved. But I don’t know what inflation is going to be over the next decade, and neither does anybody else.
