Hubris at the Fed and original sin

GoldSeek/John Mauldin/7-24-2022

cartoonish representation of Adam and Eve in the Garden of Eden

 “The Fed’s actions under Yellen and Powell were the natural progression of Greenspan’s original sin: thinking the Fed could and should use its power over interest rates to produce desirable economic outcomes. To be fair, low rates had some positive effects. But the future was unevenly distributed and certainly not permanent. Fed leaders thought this time was different. It wasn’t. So here we are, facing maybe not the worst inflation in history, but probably the widest inflation in history. The US economy is the world’s largest—far larger now than in the 1970s. And we don’t have a Volcker to do the dirty work this time.”

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“Because we all know exactly how this Old Story ends, right? We know that when prideful human leaders lift themselves and their people up to unnatural heights by stealing what is not rightfully theirs, their society is struck down in retribution. We’ve seen this movie a thousand times before.” – Ben Hunt, Epsilon Theory, Hollow Men, Hollow Markets, Hollow World

“At the meeting, Volcker publicly agreed with Fed Chair Yellen*. But only a few months later I asked Volcker in person whether he stood by his words. ‘No,’ he replied, ‘of course there’s a bubble. My grandchildren can’t afford to buy apartments in New York City. I just didn’t want to say so in front of The Wall Street Journal .’” – Ed Chancellor, author, The Price of Time: The Real Story of Interest

* That we are not in a financial bubble

USAGOLD note: Deep thinking on how we got where we are and where we might be headed from John Mauldin & friends…… A must read. Mauldin ends by saying he just met with a number of financial notables in New York City (names you would recognize) and the recurring question was “how does this end?” – to which he answers: “No one really knows.”

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