Welcome to Thoughts on the Market. I'm Mike Wilson, Chief Investment Officer and Chief

U.S. Equity Strategist for Morgan Stanley. Along with my colleagues bringing you a variety

of perspectives, I'll be talking about the latest trends in the financial marketplace. It's Monday,

July 6th at noon in New York. So let's get after it. A legend is defined as a non-historical

or unverifiable story handed down by tradition from earlier times and

popularly accepted as historical.

To many people, inflation is like a legend that's hard to verify, but generally accepted

as having existed in the past.

As someone who grew up in the 1970s in the United States of America,

I can assure you that inflation is a very real thing

even though it hasn't been seen in decades.

My recollection of this period is that inflation can be very disruptive, even destructive to both businesses and households.

Gas lines, food shortages, and other rationings are the most vivid images of that period.

However, it was the mindset that sticks with me more than anything else.

The expectation that prices would always be higher in the future and may be significantly higher

led to a quiet

discomfort about whether we would be able to afford the most basic

items of life shelter, transportation, and food.

That mindset is what drives the vicious circle of higher prices.

And with that as a backdrop, many individuals often ask me why the Federal Reserve or other

Central Banks are trying so hard to get higher inflation.

Aren't stable prices a better thing for most people and companies trying to plan for the future?

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