Cathie Wood, an innovation investor, rebutted Monday’s theories of hyperinflation by Jack Dorsey (Twitter and Square founder).

Ark Invest CEO, founder, and chief executive officer of Ark Invest used Twitter to elaborate on her contrarian theories about deflation. Dorsey tweeted Friday evening: “Hyperinflation will change everything.” It is happening. Wood believes that Wood’s theory will be realized sometime in the next few weeks.

“I thought inflation would rise in 2008-09 after the Fed began quantitative easing. It didn’t. I was wrong. Instead velocity, which is the annual rate of money turning over, declined. This took away inflationary sting. Wood tweeted that velocity is still falling.

Many market participants are worried about price increases, but the investor who is aggressive will not be. expects deflation amid a breakdown in commodity prices, a failure of companies that fell behind innovation, company stockpiling and innovation trends taking off.

We believe three types of deflation can overcome supply-chain-induced inflation, which is wrecking havoc on global economies. There are two sources of deflation: one that is long-term and the second, which can either be secular or cyclical. Wood stated in the thread that technologically-enabled innovation was deflationary, and it is the strongest source.

Manager of ARK Innovation noted that artificial intelligence training costs are falling by 40%- 70% annually, which is a record breaking deflationary force.

The decline in costs and prices leads to velocity and, if possible, deflation. She said that if consumers or businesses think prices will drop in the future they will delay buying goods and services. This will push the velocity of money downward.

Wood also said the S&P 500 companies that did not invest enough in the future will also be a deflationary force in the economy in what is known as “creative destruction.”

“Since 2008/09’s tech and telecom busts as well as the Global Financial Crisis (2008), many companies have acted in short-term shareholder interests. They leveraged their financial resources to pay dividends and to buy back shares. She tweeted that they haven’t invested enough in innovation, and will likely be forced to service their loans by selling obsolete products at discount prices: deflation.

Wood has called these companies “value traps” before stating that they are threatening the major stock markets averages.

Stockpiling goods as a result of the pandemic or supply chain disruptions is another factor that could lead to inflation. Wood explained that many companies are overordering supplies and the economy will shift to the service sector once the economy expands.

“Because companies shut down, and were caught flatfooted when goods consumption rose during the coronavirus crise, they are still scrambling for catch-up, likely double- or triple-ordering above their needs,” she said.

Prices should begin to fall once the holiday season is over and businesses have excess supply. China’s crackdowns caused prices for some commodities, including lumber and ironore to fall 50%. Wood noted that oil prices are an exception and have psychological significance.

Wood was a star after Ark Innovation’s 2020 success, which saw a return of nearly 150%. The inflows to the fund this year are more than $5.7 million, but it is still down by 2%.