Hedge fund manager Michael Burry, famed for forecasting the 2008 financial crisis, says that the Federal Reserve “has no intention of fighting inflation.” He added that the Fed’s “Serial half-point hikes are for getting elevation before stocks and the consumer tap out.”
Michael Burry on Inflation and Fed’s Rate Hikes
Michael Burry is a famous investor who founded investment company Scion Asset Management. He shared his views on Thursday’s U.S. economic, inflation and interest rate rises.
His greatest achievement is being the first to profit and foresee the U.S. subprime crisis in mortgage lending that took place between 2007-2010. He is profiled in “The Big Short,” a book by Michael Lewis about the mortgage crisis, which was made into a movie starring Christian Bale.
Burry sent this tweet Thursday
The Fed does not intend to fight inflation. Half-point increases in serial amounts are to raise stocks before the consumer taps out.
“Same with rapid-fire QT [quantitative tightening]. The Fed’s all about reloading the monetary bazooka. So it can ride to the rescue & finance the fiscal put,” Burry added.
His tweet was liked over 13.8K times, and retweeted more than 2.2K times at the time of this writing. Burry was supported by many people on Twitter.
One user wrote, “It is correct that the Fed would like room to ease again.” Another noted: “Not just the Fed. Take a look at the other central banks around the globe raising interest rates at the same time and at the same basis points. Canada and China increased their rates by 50bps on the 24th of each month. This is coordinated and they think it will work without any major collapse.” A third user opined, “Anyone who doesn’t blame the Fed for out-of-control housing inflation is gaslighting you.”
Data released this week showed that the U.S. rate of inflation rose to 8.5% in March, a record high for any month. This is despite not showing signs of slowing. Many people think that inflation is worse than reported.
Gold bug Peter Schiff commented Thursday: “According to the government March consumer prices rose by 8.5% YoY. Consumption prices include the price we pay for both imported and domestic goods. However, March’s YoY export and import prices rose by 18.8% and 12.5% respectively. That’s an average rise of 15.65%!”
James Bullard (president of the Federal Reserve Bank of St. Louis) has warned repeatedly that the Fed must raise interest rates faster in order to combat inflation. He told the Financial Times this week that it is “fantasy” to think the Fed can bring inflation down sufficiently without raising rates to a level that constrains the economy.
Christopher Waller, Federal Reserve Governor believes inflation reached its peak in March. He said Thursday: “I’m forecasting that this is pretty much the peak. It is going to start to come back down.”
Are you in agreement with Michael Burry’s views? Leave a comment below.
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