After the June FOMC meeting, investors were jittery that the Fed was going to tighten monetary policy to fight inflation. Now the thinking seems to be that there is no inflation problem. It really is just transitory. Everything is great because – well – the Fed tells us so!

The big difference between last week and this week was last week everybody was worried that the Fed was going to fight inflation. This week they're not worried that the Fed is going to fight inflation because they don't think there's any inflation to fight because they pretty much have decided that the Fed is right and that inflation is transitory."

Since inflation is transitory, the central bank won't have to adjust policy significantly to fight it. Of course, at some point rates will go up slightly. Monetary policy won't always be this loose.

But the Fed is never really going to have to slam on the brakes because there is no inflation problem now or on the horizon. Sure, prices are moving up now. But there's nothing to worry about because it's all transitory."