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Johan Lunde Sagen's avatar

Thanks for yet another great post Michael.

I am not sure if this is relevant, but reading this note made me think of a tweet I saw yesterday. As for what Mr. Powell does or does not to see, I don’t know, but in the Open Market Committee meeting in 2012 he said the following :

"I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy."

Jerome Powell, Chairman of the Federal Reserve, then member of the Board of Governors, Oct 2012 Federal Open Market Committee Meeting.

https://twitter.com/memeatball/status/1637439922326863876?s=46&t=-6ei2FgIdSLjiKYY-s7mRA

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Dartz's avatar

Nice essay. Thesis is that a significant part of the problems (in not all) are due to Fed actions. It sounds similar to iatrogenic actions by physicians, who's misguided actions kill patients, because the physician's have poor, or limited understanding both of the problem and of their tools.

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