Inflation is severely affecting world industries. However, for great figures of the North American business fabric, the situation in the United States is even more serious. The CEO of Twitter, Jack Dorsey, for example, considers that hyperinflation is a fact that is about to occur in the North American country and that “it is going to change everything”, although he also added that it would later reach the whole world.
“We are seeing very substantial inflation,” Warren Buffett said during Berkshire Hathaway’s annual shareholders meeting in May. “Costs just went up and they just kept going up,” he added of his company’s home construction operations. Something that is also shared by the manager of the hedge fund Pershing Square Capital Management, Bill Ackman, who assured that “there is a very significant inflation” , and added “we are seeing that house prices go up a lot, you have to have a friend who knows to the CEO to buy a house. ”
The supply crisis is leading to an inflation of production costs and, therefore, to an increase in product prices. Thus, the price of goods has increased in recent weeks and is expected to grow even more in the coming months .
So much so that the US Consumer Price Index (CPI) rose 5.4% in September. However, hyperinflation occurs when this price inflation occurs in an uncontrolled and abrupt manner.
For Buffet, this inflation is a “gigantic corporate tapeworm” that devours the company’s cash and erodes the real returns of investors, as Insider collects .
Michael Burry, for his part, already warned of the arrival of a possible inflation in April 2020, and in February of this year he reiterated his concern about the world economy. The famous investor explained that the current situation could be more serious than the inflationary crisis in the United States in the 1970s or the hyperinflation of Germany in the 1920s.
Bottlenecks continue to worry companies
During the month of September, the US business fabric suffered a supply bottleneck process, which led to the shortages of these companies and the consequent increase in product prices.
The country’s company, which had some liquidity after a savings trend derived from the increase in the Delta variant in the US, began acquiring again, positioning sales records near all-time highs.
However, the accumulation of orders, added to the crisis in maritime transport, has prevented these companies from being able to supply themselves , so consumers are not seeing their level of demand satisfied.
Given the situation, the president of the US Federal Reserve, Jerome Powell, has been forced to show his face. Powell has explained that if the inflation process continues on this trend, the central bank may need to act to ensure that the rise in the price of consumer goods does not become permanent.
In addition, the president of the Reserve added that inflationary pressures “will probably last longer than expected.” In fact, they could last “well into next year,” he said.
Something that Tesla CEO Elon Musk has also stressed, who has already shown his concern about the current situation on several occasions. The South African tycoon, who is seeing in the forefront the impact that the semiconductor crisis is having on technology, said recently: “I do not know in the long term, but in the short term we are seeing strong inflationary pressure . ”
This fear of inflation has also been raised by other big names such as Paul Tudor Jones, founder of Tudor Investment, who said that “it is probably the biggest threat to financial markets and society in general”, or Jeff Gundlach, CEO of DoubleLine, who warned that he does not believe that “inflation down 4% at any time in 2022” .
“I really think there will be a crisis in the way that we go, in the way that we print money, in the way that we get into inflation,” said Icahn & Company founder Carl Icahn.
For the CEO of Omega Advisors, Leon Cooperman, this situation will last for a long time. “This idea that inflation is transitory is a chimera. 65% of commercial costs are labor,” he said.