Transcripts

Street Critique -- Kevin Depew, Executive Editor of Minyanville.com

GHARIB: Tonight's "Street Critique" guest says there's some hysteria developing over inflation in food and energy. He's Kevin Depew, executive editor at the financial information website, minyanville.com. Hi, Kevin. Nice to see you again. KEVIN DEPEW, EXECUTIVE EDITOR, MINYANVILLE.COM: Hi, Susie. Good to see you.

GHARIB: You say that we have in an episode of hysteria over the symptoms of inflation. Tell us what you mean.

DEPEW: First of all, we have to go back a little bit and understand what exactly is inflation. Over the years because it's been convenient for politicians mainly to do so, inflation has come to be known rising prices at the supermarket or wherever or for apparel or whatever happens to be going up at a given time. Inflation very simply is an increase in the quantity of money in circulation. The Fed has been creating credit for almost 20 years now. So we're only now seeing some of the symptoms of that trickle through. But I think ultimately and ironically this is deflationary.

GHARIB: So, inflation is not a problem even though people are paying higher bills for gas and food, right?

DEPEW: No, it's a problem. But what's a problem are the symptoms of inflation. The problem of inflation, for inflation, goes back 25 years to the Greenspan era of credit creation, up through Bernanke's massive amount of credit creation. Now that credit is not making it past banks' balance sheets, so while the Fed is trying to give more drugs to the credit addicted addict, those drugs aren't making it to Main Street.

GHARIB: What do you think the Fed is going to do? Is it time to cut rates more or to raise them because of these inflation concerns?

DEPEW: That's a great question. It's a co-dependent relationship because Main Street ultimately, they're the ones who are going to decide if credit if we are unable to accept more credit or take on more credit. Banks as an intermediary have already decided they're trimming the amount of credit that they're extending. So I think that the Fed's hands are really tied. They don't have as much say in the matter as they'd like to believe.

GHARIB: All right, so despite this complicated scenario, you're still bullish on the stock market. Why is that? Oh, I'm sorry, we ran into some technical problems and we just lost our guest.

***Technical problems disrupted this interview.