Fed still needs to ‘shock the market,’ original ‘Dr. Doom’ economist says

[Kamaji]

Fed still needs to ‘shock the market,’ original ‘Dr. Doom’ economist says

By Thomas Barrabi
August 17, 2022

Federal Reserve Chairman Jerome Powell needs to get even more aggressive in order for the central bank to successfully tame decades-high inflation, according to the famed economist originally known as “Dr. Doom.”

Henry Kaufman, who had a famed stint working for Salomon Brothers during the inflation crisis of the 1970s, asserted that Powell has been too cautious in his leadership of the Fed as inflation hovers at 8.5%.

“I am still waiting for him to act boldly — ‘boldly’ means he has to shock the market,” Kaufman said during an interview with the Financial Times. “If you want to change someone’s view, if you want to change someone’s action, you can’t slap them on the hand, you have to hit them in the face.”

*  *  *

Source:  https://nypost.com/2022/08/17/fed-still-needs-to-shock-the-market-economist-henry-kaufman/

[Free Vulcan]

If we were the economy of 40 years ago when inflation got out of hand, the Fed killed it with high interest rates, resulting in a brutal recession that was fortunately kept short most places (except the Rust Belt) by the advent of Ronald Reagan, I'd probably agree.

This is a totally different bird we got today. Try a hard kill on inflation right now via interest rates, and we might not survive the snapback.

[berdie]

I think most retirees, and myself, are already weary of "shock and awe". jmho