A big debate going on as it relates to public companies—and the U.S. economy as a whole—surrounds how long a period of elevated inflation is going to last. There is one argument that says that most of the inflation we are seeing now is due to supply chain issues that have been exacerbated by the events in Eastern Europe. As such, as supply chains rebalance, China allows its citizens to go back to work and commodity companies ramp up production, the rate of inflation will abate. However, there is another argument, as articulated by Johns Hopkins Professor Steve Hanke, that the reason the U.S. is seeing such high inflation rates (while some other developed economies are not) is due to the increase in the money supply associated with the Fed’s response to the pandemic. Hanke has gained some notoriety for making a very prescient call about inflation in a Wall Street Journal op-ed in the summer of 2021. More recently, in an interview with investment bank Jefferies, Hanke made some interesting comments about the root of our inflation:

Given all of the above, Professor Hanke also cautions people that inflation is unlikely to peak anytime soon:

We are not going to pretend to know the definitive answer to ongoing this debate. Our bet would be that some of the inflation is transitory and some might not be. But, if Professor Hanke’s somewhat contrarian position is right, we would wager that a good percentage of stock market participants will not be prepared for another year (or more) of inflation rates at a level many investors have not experienced in their careers or even lifetimes.