PineBridge's Michael Kelly: there is a third way for inflation

It's not black and white

Investors debating the path of inflation tend to fall into two camps: those who believe it will be truly temporary, and those who expect a permanent structural shift toward higher, unhealthy inflation in the future.

Most are not considering a third way lying between these binary views - that inflation will persist beyond year-end but ultimately segue into an investment-friendly reflationary regime. Looking at the pessimistic view, what factors could cause a shift to persistently high inflation? Historically such problematic inflation has required years of nurturing. Today, it could take root if modern monetary theory (MMT) were to become structurally embedded, rather than remaining a response to crisis conditions.    On the monetary side, there is no sign of overt yield control from the Fed, w...