INFLATION - Monty Guild

INFLATION - Monty Guild - The Drivers of Inflation: By...

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The Drivers of Inflation: By Monty Guild ME 3232: Engineering Economics and the Real Economy July 4, 2008 (Modifications 11/5/08) Introduction: Prof. Lyon The following commentary provides an excellent discussion on the causes of inflation. It is readily understood by anyone with an understanding and appreciation of the time value of money. It is written by noted wealth management and hedge fund manager Monty Guild. Mr. Guild is the CEO of Guild Investment Management, Inc. The original commentary provided here can be found, along with further related market and economic commentary, at or . Follow-up 11/5/08: Prof. Lyon Since the commentary by Mr. Guild was assembled to create this document, the markets have gone through massive turmoil and there is wide speculation of a world-wide recession and many countries are clearly showing signs of economic contraction. In the midst of this, countries such as China are seeing annual economic growth rates drop from 10-12%, to 7-9%. This is still good, but the drop reflects difficulties in their export markets. As a result, some of the examples given to illustrate the inflation drivers are a bit out of date. However, the drivers are still quite valid, and evidence of their effects are still apparent today, and some of the drivers will go into overdrive in the near future given the international bailouts that are occurring. Put simply, inflation may seem to have subsided for now, but it will become quite apparent again during 2009. As a result, it remains important for people that are looking to plan for their future, and protect their investments, to understand these drivers and be aware of the potential detrimental effects of inflation. "INFLATION'S DRIVER" PART 1 OF THE SERIES Posted On: Tuesday, June 17, 2008 Author: Monty Guild INFLATION WILL COME MORE AND MORE INTO PUBLIC AWARENESS OVER THE NEXT SEVERAL YEARS There are many indicators of inflation in the world that we watch to forecast oncoming inflation. Currently, the great majority of these tell us that the inflation we have seen so far…is just getting started. In our newsletters at Guild Investment Management we have been talking about inflation and its expected arrival for almost two years. We have pointed out the reasons for inflation, and discussed them in a general way. I would like to go into each one individually in a short memo that we will send to clients and to the CIGA’s [Comrades In Golden Arms – name carried by readers of] in the next few weeks. The public media has picked up on the theme of inflation in the last few months, and they have been haranguing the public about higher food and energy prices. As a result, many people believe that once the rate of the rise in food and energy prices slows, the rate of increase in inflation will recede.
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IT IS NOT THE CASE THAT FOOD AND ENERGY ARE THE SOLE OR MOST IMPORTANT DRIVERS OF INFLATION TODAY. Inflation is a function of many variables and there are about 10 of them that we will discuss in coming memos. TEN REASONS WHY INFLATION WILL CONTINUE…TODAY WE WILL START
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This note was uploaded on 11/19/2010 for the course ME 3232 taught by Professor Lyon during the Fall '10 term at University of New Brunswick.

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INFLATION - Monty Guild - The Drivers of Inflation: By...

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