Ken Fisher on Crypto, Inflation, AI Bubble and Annuities
Ken Fisher answers monthly mailbag questions covering crypto's unsuitability as a monetary system, the true causes of inflation, central bank predictions, and annuities. He argues that inflation is solely caused by excess money creation, not rising commodity prices, and dismisses both crypto monetary reform and central bank warnings as largely ignorable. He also advises anyone considering annuities to carefully read the contract before purchasing.
Summary
In this Monthly Mailbag segment, Ken Fisher addresses four viewer-submitted questions spanning cryptocurrency, inflation, AI bubble warnings, and annuities.
On cryptocurrency and monetary reform, Fisher dismisses the idea that Bitcoin or other digital assets will replace or significantly reshape the current monetary system. He argues that central banks will be 'rigidly resistant' to such changes, and that crypto's extreme volatility makes it fundamentally unsuitable as a functioning monetary medium, regardless of what its proponents claim.
On inflation and oil prices, Fisher makes a strong monetarist argument: inflation is caused exclusively by excess money creation, not by rising commodity prices. He explains that when oil prices rise, the result is economic substitution rather than inflation — consumers cut back on elastic goods like luxury items to compensate for inelastic oil expenditures. This causes prices to shift between categories rather than rise overall. He points to LVMH as a real-world example of a luxury brand negatively impacted when oil prices rise. Fisher states that the key metric to watch is whether M3/M4 money supply grows significantly faster than GDP, which he says has not been happening.
On the Bank of England's warnings about an AI bubble, overvalued stocks, and private credit risks, Fisher advises viewers to largely ignore central bank prophecies. He is blunt in his criticism, stating that central banks 'know no more about how all this stuff's going to work out than the average fourth grade elementary school class does,' despite having large teams and data.
On annuities, Fisher — who famously coined the phrase 'I hate annuities' — softens slightly on the language but maintains his skepticism. His core advice is that anyone considering an annuity should read the full contract carefully before purchasing, as the legal document will reveal the true nature of the relationship with the insurance company, which often differs significantly from what salespeople describe.
Key Insights
- Fisher argues that crypto is fundamentally unfit to serve as a monetary system because its extreme volatility undermines the core function its proponents envision for it, and that central banks will remain rigidly resistant to any such monetary shift.
- Fisher claims that inflation is caused exclusively by excess money creation — always and everywhere — and that rising oil or commodity prices do not cause inflation but instead trigger substitution effects, shifting spending away from luxury goods rather than raising the overall price level.
- Fisher uses LVMH as a real-world example to illustrate his substitution theory, arguing that when oil prices rise, consumers with stretched budgets cut back on luxury goods, directly impressing revenue and pricing power at companies like LVMH.
- Fisher states that central banks, including the Bank of England, have no meaningful predictive edge over the general public despite their data and trained economists, and that their warnings about AI bubbles, overvalued stocks, and credit markets should be largely ignored.
- Fisher maintains his skepticism of annuities not by condemning them outright, but by insisting that anyone considering one must read the full contract in detail, arguing the contract itself will reveal the true — often unfavorable — terms that salespeople obscure.
Topics
Full transcript available for MurmurCast members
Sign Up to Access