Billionaire investor Ron Baron says inflation will propel major stock gains in the coming decades, though everything will be 'twice as expensive'

• The Dow could surpass 900,000 over the next 50 years, according to billionaire Ron Baron.
• The veteran investor said persistent inflation could fuel economic growth.
• Higher prices could bring major stock gains, though it will make everything "twice as expensive," he warned.

Stocks are in for major gains over the next half-century, thanks to persistent inflation that will make everything "twice as expensive," according to billionaire investor Ron Baron.

In an interview with CNBC on Saturday, the Baron Capital CEO pointed to increasingly bearish sentiment in the market, with investors fretting over a potential recession, higher interest rates, and geopolitical headwinds.

But those risks are irrelevant to the overall trajectory of the market, which has been on an upward path for most of the past half-century, Baron said. Stocks are now 34 times their value in 1970, he estimated, despite various wars, recessions, and pandemics spanning last several decades. Economic growth also soared during that time period, with GDP notching $26 trillion last quarter, up from $1 trillion in 1970.

Baron predicted US economic growth will continue to accelerate, blowing past 7% over the next 50 years.

"I expect inflation to be as it always has been, as it always has been in every single democracy that's ever existed, 4-5% year," Baron said. "That means you're going to have 35 times your money over the next 50 years. That means that the Dow Jones, which is now 34,000, will be 900,000," he later added, assuming growth notched at least 7%.

Other experts have noted that elevated inflation could fuel stock gains, as higher prices lead to higher earnings for corporations. On the flipside, it could lead to more pain for consumers:

"I think everything is going to be twice as expensive in 14, 15 years," Baron said. "Maybe [inflation] will go a little bit lower, but it's not going to stay lower."

Prices clocked in at 4% in the May Consumer Price Index report, down from a 41-year-high in the middle of last year, but still well above the Fed's 2% target. Officials have suggested interest rates could remain tight until the central bank gets a handle on inflation, though higher rates could weigh on asset prices.

Investors are pricing in a 72% chance the Fed will raise rates another 25 basis-points at their July policy meeting, according to the CME FedWatch tool. That move would lift the Fed funds rate target range to 5.25-5.5%, the highest rates have been since 2007.