Markets are pushing Fed into developing economy territory

Bloomberg/Mohamed El-Erian/3-22-2022

cartoon image of man flipping a gold coin“Judging from price movements on Monday, the Federal Reserve risks slipping further into a no-win interaction with markets that is more familiar to developing countries that lack policy credibility than to a systemically important central bank — let alone the world’s most powerful one.”

USAGOLD note: The problem reduces to a Hobson’s choice: prolonged inflation or recession. We could end up with a combination of the two. None of this is new. El-Erian, though, does add something new to the mix – comparing Fed policy to that of a troubled emerging nation-state. The Fed he says might end up hoping for an “immaculate recovery.” Does not sound like the rational approach to the markets and economy central bankers so pride themselves in ……

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