“Those who cannot remember the past are condemned to repeat it” is a well-known quote that’s also incomplete. You can remember the past vividly and still have to repeat it. This happens when, for instance, powerful people forget (or ignore) important lessons that affect everyone.
—John Mauldin
Dear reader, The Federal Reserve is supposed to keep the US economy on an even keel. But lately, what we’ve seen is almost the opposite. At our Strategic Investment Conference (SIC) 2022, Tom Hoenig, former Kansas City Fed president, said it all began innocently. John Mauldin wrote about it in the May 27 issue of Thoughts from the Frontline: The Fed became more accommodating to markets in the Mexican peso crisis, then later with Asian and Russian debt crises. These were indeed bad situations. The Fed had to respond, which it did, preventing the markets from imploding. Wall Street hailed Greenspan as a genius. This was the genesis of the overconfidence Bill White talked about, and other central banks had it, too. [...] Central bankers began to think the Fed could manage its way out of any crisis. This extreme hubris helped cause a series of major monetary policy mistakes, leading to the Great Recession (and now to a “Second Great Recession”). A few wise men and women sitting around a table thought the enormously complex economy was subject to their simple decisions. It wasn’t then, and it isn’t now. We’ve seen that relying on the Fed or the government to get us out of dicey situations isn’t a good idea. Taking matters into your own hands generally is. Today is the final day that our Special Report, The #1 Inflation Hedge and How to Make It Work for You, will be available to Mauldin Economics readers. Make sure to claim your free copy before it’s too late. Best, Mauldin Economics |
