This episode traces the start and origins of today's rising inflation, which clocked in at 8.6 percent in America last month. On February 18, 2021, DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, published a series of assertions on inflation. BOVE warned that inflation would be "out of control" by yearend, noting how the Fed was expanding its balance sheet to pay for Federal deficits. Now the Fed is embarked on a series of interest rate rises while at the same time shrinking its balance sheet to tame inflation. That raises borrowing costs and presents a host of monetary challenges. 

"It appears that the Federal Reserve may have at least $2.79 trillion in securities worth less than what the Fed paid for them," BOVE said in a recent note, laying out one example. "If the Fed were to sell any of these securities, it would require posting a loss when the Fed reports its quarterly numbers."

BOVE and MAT VAN ALYSTYNE, Odeon co-founder and managing partner, in this episode, see in the recent plunges in the major indices, the hand of the Fed. "The markets recognize that change is coming," BOVE says. "Investors clearly recognize that the Fed is unlikely to walk away to kill inflation." Also in this episode, BOVE sees a bright future for US banks after the nation emerges from a coming recession. Banks will then see a surge in business lending activity, he says. He explains why. Joining the CONVERSATION is journalist, JOHN AIDAN BYRNE.