Rosenberg's case for inflation rather than deflation

Decades ago, when economist David Rosenberg was with Merrill Lynch, from time to time he used to come by the offices of the firm in Boston where I worked. He came to talk about interest rates and the markets in general.  He was always respected by the cognoscenti for his knowledge, intelligence, and common sense, so we always looked forward to learning what he had to say.

Because of this, when he was on Bloomberg Surveillance on Thursday, I paid attention, and all the more so as I realized he was making the case that we will be surprised when we realize that inflation is much higher than assumed. "Don't worry about deflation," he argued.

The key points that stuck in my mind were that service sector inflation is already at 3% and that bank lending is now growing rapidly.  Here is a clip from his much longer interview.

(Here is the full hour from Bloomberg Surveillance, which deals with many things.  The inflation discussion begins around 1:22 .)