Lacy Hunt & Brent Johnson: The US Has Entered A New Inflationary Era That Will Prove Bad For Bonds

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**Adam Taggart** (0:58)
Welcome folks to this discussion held for Zero Hedge. I'll be your host today, Adam Taggart. I'm the founder of Thoughtful Money. It's a financial media company that does a lot of interviews like this. We are incredibly lucky today folks to be speaking with two giants, I'll say.
The first one is Lacy Hunt. Lacy is one of the most accomplished economists still living these days. He is a former senior economist to the Federal Reserve. He now is the executive vice president at Hoisington Investment Management. Just to paint a little bit of a picture of Lacy's background, I'll just show you how accomplished his career has been. He earned his doctorate at Temple, and for many years served on its board of trustees. He's now an honorary trustee of the institution. He's done a lot of rigorous academic research in his career, published in all sorts of different venues like the Federal Reserve of Dallas, where he also sat on the Committee of Financial Security, as well as its International Committee. Later, his work was published in the Journal of Finance.
He has written an incredibly influential book about a 100 variable economic model of the financial markets that he created. And that's been well-reviewed by a number of different sources in the financial media, but including institutions like the Wall Street Journal.
He has traveled the world working for HSBC, Chase Econometrics.
His main fields of study have been macroeconomics, international markets, and finance. He has over the span of his career, seen the inflation caused by the Vietnam War, the failed response of both Burns and Miller running the Fed, although he did also see the success that Volcker finally had in taming the inflation of the 70s and early 80s. He was at the Fed when the country went off the gold standard. He had a front-row view to all of that. He's seen the failure over time of price controls every time they've been attempted pretty much and has over his career gotten to know specifically a lot of the greats in the economic world, like Milton Friedman. He's debated Nobel laureates. After that, he became an investment manager, and right now, as I said earlier, he's at the Washington Investment Management. Really, truly one of the most accomplished living economists, as I said. Joining us as well with Lacy is the Dollar Milkshake founder himself, Brent Johnson. Brent is the CEO and CIO, I believe, at the Santiago Capital Fund, where Brent is a money manager and manages hundreds of millions in assets under management. Gentlemen, thank both of you for joining us for this discussion today. Lacy, we're going to be diving deep into your most recent letter, which was kind of a bombshell in the economic ecosystem, because you've kind of been known as somewhat of doctor deflation over much of your career. But in your latest letter, you have pivoted basically and you give all the reasons why, where you're now more concerned about inflation versus deflation going forward. We very much look forward to digging into your reasons why. But anyways, Lacy, thank you so much for joining us.

**Lacy Hunt** (4:42)
Thank you.
My pleasure. Great to be with you all.

**Adam Taggart** (4:46)
Thank you. It's such a treat.
Brent, my friend, thank you for joining us as well.

**Brent Johnson** (4:53)
Thanks for having me.
I'm really here to listen and learn. I may have a few questions towards the end, but I really just feel privileged I get to sit here and listen to Lacy for a while.

**Adam Taggart** (5:07)
Yeah. Like I said, it's a great privilege. Lacy, you've got an awful lot of fans out there in the world. So folks, what I'll do is I'm going to walk through with Lacy the main tenets of that recent pivot paper that I talked about. Brent, feel free at any time to chime in. Then after Lacy has flushed out his whole reasoning, then Brent and I will start asking a bunch of clarifying questions. So Lacy, if we can kick it off, it's just a very high level.