About his negative view on money printing
"The Fed is flooding the system, it doesn't increase economic activity and asset prices in concert.
Instead it creates excessess in countries and asset classes.
Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market—things like stocks, bonds, art, wine, jewelry, and luxury real estate. The art-auction houses are seeing record sales. Property prices in the Hamptons rose 35% last year. Sandy Weill [the former head of Citigroup] bought a Manhattan condominium in 2007 for $43.7 million. He sold it last year for $88 million"
It wouldn't have been worse without Quantative Easing after the economic crisis of 2008?
"The Fed is flooding the system, it doesn't increase economic activity and asset prices in concert.
Instead it creates excessess in countries and asset classes.
Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market—things like stocks, bonds, art, wine, jewelry, and luxury real estate. The art-auction houses are seeing record sales. Property prices in the Hamptons rose 35% last year. Sandy Weill [the former head of Citigroup] bought a Manhattan condominium in 2007 for $43.7 million. He sold it last year for $88 million"
It wouldn't have been worse without Quantative Easing after the economic crisis of 2008?
"Why start with 2008? The government bailed out savings-and-loan depositors during the thrift crisis in the late 1980s. The U.S. Treasury and Federal Reserve bailed out Mexico in the mid-1990s. The biggest policy mistake occurred with the Fed-supervised bailout of the hedge fund Long-Term Capital Management in 1998, because it gave a green light to Wall Street to keep leveraging up.
Another policy mistake was made in 2000, right after the Nasdaq collapsed. The system probably could have handled a recession then, but instead, the Fed engineered a drop in interest rates, eventually to 1%, that encouraged a huge housing bubble. After it burst in September 2008, Bernanke slashed short-term rates to near-zero, where they are still. Meanwhile, the stock market is up 150% from its 2009 lows''.
Is the US stock market in a bubble?
'' I am suggesting that in the fourth year of an economic expansion, near-zero interest rates will lead to a further misallocation of capital. I thought the U.S. market would have a 20% correction last fall, but it didn't happen. I also said the market might explode to the upside before the correction occurred. We might be in the final acceleration phase now. The Standard & Poor's 500 is at 1650. It could rally to 1750 or even 2000 in the next month or two before collapsing. People with assets are all doomed, because prices are grossly inflated globally for stocks, bonds, and collectibles''.
