Longtime Deflationist Now Fears Inflation More | Lacy Hunt

WORRIED ABOUT THE MARKET? SCHEDULE YOUR FREE PORTFOLIO REVIEW with Thoughtful Money's endorsed financial advisors at https://www.thoughtfulmoney.com For years, Lacy Hunt, one of the greatest living economists, has feared deflation would pull the economy into a prolonged morass of stagnation. But now, the forces in play have shifted tectonically. A new secular era has begun. One of rising inflation. And Lacy doesn't see it ending for years. He has shifted his conclusions. He now warns that inflation is the greater risk to the economy. What exactly will that mean? And what consequences will it have for both households and investors? To find out, watch this video. #inflation #deflation #recession 0:00 – Hunt’s shift from deflationist to inflation risk 2:19 – The production function explained 3:08 – How the fall of the Berlin Wall & opening of China created a favorable era 4:03 – Globalization’s focus on cost minimization & economies of scale 4:20 – Why the goals are now shifting to post-globalization 5:30 – From comparative advantage to needing capability across the full production chain 6:20 – Moving into the post-globalization era 6:42 – Entering a period of capital scarcity 7:43 – AI’s massive capital requirements 7:51 – Decaying electric grid, defense spending & fiscal pressures 8:45 – Interest expense now larger than defense spending 9:31 – Why debt appeared disinflationary from 1990–2020 10:40 – Reinhart & Rogoff and the true role of debt 12:11 – Adam’s summary of the production-function shift (confirmed by Hunt) 14:55 – Why AI is not riding to the rescue (at least not soon) 16:49 – Capital scarcity & the critical role of domestic/net national saving 18:24 – Why net national saving is near historic lows (financialization & the Fed put) 21:18 – Stagflation as the likely structural outcome 23:06 – Stealth quantitative easing since mid-December & the surge in bank credit/ODL 26:42 – Challenges facing the new Fed chair & the difficulty of normalizing the balance sheet 29:27 – The Fisher equation: real rates, inflation expectations & rising risk premia 30:21 – Niall Ferguson’s insight on interest expense vs. military spending 31:49 – Expected inflation range shifting toward 3.5–4.5% 32:14 – How long this new framework is likely to last 33:28 – Hoisington’s positioning: duration under one year (managing bills, not bonds) 33:57 – Outlook for hard assets, commodities & precious metals _____________________________________________ Thoughtful Money LLC is a Registered Investment Advisor Promoter. We produce educational content geared for the individual investor. It’s important to note that this content is NOT investment advice, individual or otherwise, nor should be construed as such. We recommend that most investors, especially if inexperienced, should consider benefiting from the direction and guidance of a qualified financial advisor registered with the U.S. Securities and Exchange Commission (SEC) or state securities regulators who can develop & implement a personalized financial plan based on a customer’s unique goals, needs & risk tolerance. All the details on Thoughtful Money's relationship with the financial advisors it endorses, many of whom regularly appear on this program, can be found in the following documents. We highly recommend you review these documents as they cover the terms that will apply should you choose to work with one of these firms at any time after watching this video. Thoughtful Money Disclosure Document: https://thoughtfulmoney.com/disclosure Thoughtful Money Agreement: https://thoughtfulmoney.com/agreement IMPORTANT NOTE: There are risks associated with investing in securities. Investing in stocks, bonds, exchange traded funds, mutual funds, money market funds, and other types of securities involve risk of loss. Loss of principal is possible. Some high risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods. A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance. Thoughtful Money and the Thoughtful Money logo are trademarks of Thoughtful Money LLC. Copyright © 2026 Thoughtful Money LLC. All rights reserved.