Kyle Bass: Actual Inflation Is Likely At 12%

With consumers’ wallets increasingly becoming drained amid skyrocketing price pressures and the Fed’s wide-open monetary policy, it is no wonder that people are no longer buying into consistently subdued inflation prints. Kyle Bass, founder of Hayman Capital Management, is the latest to dispute such statistics, suggesting that the current US producer price print is dangerously out of touch with reality.

US producer prices surged 6.6% in May from year-ago levels, marking the sharpest pace on record, and the thirteenth straight month of month-over-month increases. Nearly all indexes posted some form of price jump, particularly the index for final demand services, which saw margins for automobile retailing surge 27.3%.

Although the latest hotter-than-expected PPI print is a jaw-dropping figure, Bass suggests that the actual inflation rate is significantly higher, likely in the double-digits. In a recent CNBC interview, Bass said that the reading is actually a chain-weighted number, meaning that it does not support the full scope of price increases.

“These are numbers that are designed to artificially be low,” he explained. “If you look at a non-chain-weighted index of inflation, we think it’s running about 12%.”According to Bass, the Fed has increased the economy’s money supply by approximately 34% over the past 14 months, which has ultimately been eroding at consumer’s purchasing power. “That means people that have money in the bank, in their savings, are losing, call it 5% to 12% of their purchasing power now annually.”

Indeed, Bass joins the likes of other famed investors, most notably Paul Tudor Jones, who just yesterday warned that inflation is not all that transitory, and any upcoming move from the Fed will send markets into a tailspin. In turn, this prompted ‘The Big Short’ Michael Burry to send a warning signal this morning…

Information for this briefing was found via the BLS and CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.