The expert explained the reasons for the increase in inflation

Michael Burry, a well-known financier who predicted the collapse of the real estate and mortgage market in 2008, once again shared his vision of the situation with inflation in the United States. According to him, inflation today is not just a «by-product» of reopening enterprises after pandemic restrictions.

Burry, widely known for his downside bets, shared on the web a graph showing monthly inflation and the ratio of factors underlying the price increase, as the difference between the reopening of enterprises and the absence of such. The financier noted that in May, June and July, inflation was caused by the rise in price of used and rental cars, auto insurance, housing, airline tickets and food in restaurants after the lifting of quarantine restrictions. 

At the same time, in October, the 0.9% increase in the consumer price index (CPI) was the sharpest monthly rate of inflation since 2008, and this was not due to the reopening of enterprises. The jump was mainly caused by rising energy prices. 

Burry warned of a growing «bubble» in the market back in April 2020, then urged investors to prepare for inflation in February 2021 (against the background of the injection of trillions of dollars into the market and the recovery of a significant part of the economy). 

Moreover, a well-known shortist even compared the current dynamics of inflation in the United States with the situation in Weimar Germany in the 1920s, when the economy faced hyperinflation. Burry emphasized the similarities between these periods, noting both market mania and rampant speculation in the market.