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John Hussman is back at it with his famously esoteric views on the economy.
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The bubble expert has warned in a new note that the US financial crisis is already baked.
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Here are Hussman’s top 9 quotes on the Fed and what could come next for the economy.
John Husman is known for his famous views on the stock market and the economy.
His Latest forecast The Federal Reserve fed on that reputation when it warned that a financial crisis was already brewing for the US economy following “misguided” policy experiments.
In July, Hussman predicted stocks would run out. 64% tip-to-groove This market cycle has been characterized by three high valuations, weak investor sentiment and extended market technicals.
Husman – who called the stock market crashes of 2000 and 2008 – noted in a recent note that the central bank has other issues besides high inflation: “Unfortunately, the Fed’s one or two percent of target inflation may not be the central problem.” Face to face in the next few years.”
It spells balance sheet woes as well as future inflation, and trillions of dollars in losses for commercial banks and the Fed itself.
Here are Hussman’s top 9 quotes in a new memoir.
1. “While the Fed has suspended its experimental “zero interest” policies, it has been surprisingly slow to reduce its balance sheet enough to control interest rates without hundreds of billions of dollars in annual public spending.
2. “The Fed has only done half of its work, and it seems that it is determined to maintain a very fragile balance.”
3. “The real problem is that a decade of experimental distortions has encouraged unprecedented speculation in every common asset class, not to mention small speculation in assets stripped of any benchmark, including meme stocks, images of bored monkeys, and digital Pokémon masquerading as “currency.”
4. “Like every similar event in history, the deflation of this bubble in the financial crisis is already quietly baked in the cake.”
5. In order to prevent the false and experimental notion of an “adequate reserve regime,” the Fed is maintaining a mismatch between monetary aggregates and economic output.
6. “He is defending a monetary policy that has forced $8 trillion of uninsured money into the banking system for a decade of yield-seeking financial speculation, has encouraged the government to tacitly accept massive deficits, and is fueling further episodes of inflation and already trillions of dollars in business losses.” It brought in both banks and the Fed – invisible because the assets are not marked to market.
7. “As the Federation fights against the flame-breathing dragon, it insists on keeping the dragon as a pet.”
8. “Activist, experimental and unsystematic policy, the hallmark of Federal Reserve policy for more than a decade, distorts expectations, encourages yield-seeking speculation, distorts financial markets, drowns the banking system in uninsured deposits, and renders every corner of the economy unnecessary. Risk-taking, Especially if it ends in chaos.
9. “We don’t expect the current episode to end any differently. We hope the Federal Reserve learns the right lesson at this point, but even if they don’t, we’re fully prepared to steer the financial markets.”
Read the original article on Business Insider
