Speaking at the New Orleans Investment conference, Danielle DiMartino Booth, expert US Federal Reserve critic, as well as CEO and chief strategist of Quill Intelligence, told attendees that significant indicators are pointing to a looming financial crisis in the US and abroad.
Despite the Federal Reserve cutting interest rates three times in four months, DiMartino Booth thinks Fed Chair Jerome Powell won’t get the result he is looking for — economic stability.
“I think Jerome Powell wanted to engineer a soft landing for the economy and right now he is probably taking a victory lap saying you know, ‘I’ve managed to pull off an Alan Greenspan sequel,’ something in the spirit of 1995 or 1998,” DiMartino Booth told the Investing News Network (INN), referring to the times former Fed Chair Alan Greenspan was able to cut rates, then raise them, which prompted economic expansion.
“I distinguish the difference between now and then as, in 1995 we were at the beginning of an economic expansion, there was a lot of runway. Now we’re at the tail end — we’re late cycle — of the longest economic expansion in US history.”
The author of “Fed Up,” which uses her insights learned from time working at the Federal Reserve bank in Dallas to analyze the 2008 economic meltdown, also spoke to INN about how the Fed has warped the term price discovery, distorting the investment landscape.
“It comes down to that old phrase, ‘lower for longer and don’t fight the Fed,’ and I think the genesis of these two statements is opposed to markets functioning as they would naturally,” she said.
“If the Federal Reserve holds interest rates too low for too long then investors are going to behave differently and they are going to invest and...