An interesting article.
Is the Fed going to repeat past mistakes, as Elliott argues? Well, maybe. I was once told that if you turn off a tanker's engines, it will take it 20 miles to stop. Economies are like tankers. It takes a long time to stop them or restart them. So monetary policy has to be designed to deal with what's happening next year and the year afterwards, as well as what's happening right now. And right now, I see no signs of current or imminent global overheating -- rather the contrary. The risks of fiscal tightening have been clearly demonstrated in Europe, now plunging into recession. And too early monetary tightened has delivered Japan two decades of no growth. The weak link in the US recovery picture, housing is improving but is still far from boom conditions (see chart).
The article also mixes up cyclical and structural factors.
All the same, at some point the Fed is going to have to start withdrawing stimulus. And that will be a very "interesting" time in markets!
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