Tags: Mirhaydari | Volcker | inflation | Fed

Money Manager Mirhaydari: Volcker Has It Right on Inflation

By    |   Friday, 24 April 2015 08:40 AM

While the current Federal Reserve has expressed concern about inflation running far below its 2 percent target, former Federal Reserve Chairman Paul Volcker isn't worried. And Anthony Mirhaydari, founder of Mirhaydari Capital Management, thinks he has it right.

The Fed's favored inflation gauge, the personal consumption expenditures price index, climbed only 0.3 percent in the 12 months through February.

"I think it's fine. We haven't got much inflation, and people don't expect much inflation and that's a good thing," Volcker told The Wall Street Journal. "I'm not somebody that worries about inflation being too low." He had to essentially engineer a recession in the early 1980s to stamp out double-digit inflation.

As for Mirhaydari, "the good news is that there's growing evidence that Volcker's lack of concern is justified," he writes in The Fiscal Times.

"The economy and financial markets are showing signs of preparing for a resurgence of rising prices in the months to come." Rising wages could also help boost inflation, Mirhaydari says.

"If these trends continue, inflation should finally start climbing toward the Fed's target."

Meanwhile, Volcker notes the Dodd-Frank financial reform act of 2010 hasn't eradicated the dangers to our financial system.

"Even as the United States continues its long climb back from the financial crisis, it is all too clear that the federal financial regulatory structure is simply inadequate to head off future crises," he writes in The Washington Post.

"The structure that failed us in anticipating and responding to the emergency is largely still in place."

Many commentators have noted that the biggest banks have only grown bigger since the 2008 financial crisis. The six largest U.S. banks have about two-thirds of the assets in the country's banking system.

"Important progress has been made, here and internationally, in shoring up banking regulations, notably through stronger capital requirements," Volcker says.

"But, basically, the institutional structure for financial regulation — which traces its origins to the 1930s — has resisted repeated efforts for meaningful reform."

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While the current Federal Reserve has expressed concern about inflation running far below its 2 percent target, former Federal Reserve Chairman Paul Volcker isn't worried. And Anthony Mirhaydari, founder of Mirhaydari Capital Management, thinks he has it right.
Mirhaydari, Volcker, inflation, Fed
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2015-40-24
Friday, 24 April 2015 08:40 AM
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