Hey @RealVision crew! Cycles turn. Rewind to 1981, Fed rates hit 20pc in March. Inflation was 10.9pc. Everyone knew policy was incredibly tight. Inflation was falling. What happened? Bonds got slaughtered. US T yields finally peaked, prices bottomed, round year end at 15.8pc.
Everyone knew this was nuts. But like monkeys, too many bottoms had been picked...and the psychology was forboding. That’s what great turning points do to you. You find yourself at war with your own imagination.
Turning points are nocturnal night dreams where your Napier and Profumo homilies to reason no longer hold sway. So good luck all of you who dismiss my style - it’s the lovers and madmen whose seething brains see much more than cold logic ever will...
Fed Funds rate at 20pc and you tell me I'm crazy to suggest -200 basis points?? You say let the free market decide? The purpose of Fed intervention is to take rates beyond the market...To provoke a reaction. To pick a fight with reason. QE was supposed to raise rates. It failed.
Why? cause they never bothered to front run the market. QE was a comfort blanket, a pretence that they were doing something. Meek men seek solace from everything. That's why the Fed should go way below market. Go pick a fight. I dare you! Only then will we turn this damn cycle.
And inflation will be well restored, and in its ascendancy, before you need worry about shorting the US Treasury market. We have an inventory of timelessness to stamp before that happens.
What should you do then? Simple. You gotta change your way of thinking. Stop reading sacred scriptures from blokes in pious suits with set-ups that no longer hold sway. Make yourself a different set of rules. Go on, again, I dare you...what you waiting for?
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