Michael Burry, a famous hedge fund manager, said that the Federal Reserve has no intention to fight inflation. He also stated that the Fed’s half-point increases are meant to get stock prices up before the consumer taps out.
Michael Burry: Inflation and Fed Rate Hikes
Michael Burry, a famous investor and founder of Scion Asset Management shared his thoughts on Thursday’s U.S. economy and inflation.
He is most well-known for being the first investor who was able to profit from the subprime mortgage crisis in the United States that took place between 2007 and 2010. His story is featured in Michael Lewis’ book “The Big Short” about the mortgage crisis. It was made into a movie with Christian Bale.
Burry tweeted Thursday
Inflation is not a goal of the Fed. Half-point increases in serial amounts are to raise stocks before the consumer taps out.
“Same thing with rapid-fire QT [quantitative loosening]. The Fed is all about reloading its monetary bazooka. Burry said that the Fed can come to the rescue and finance the fiscal put.
His tweet was liked over 13.8K times, and retweeted more than 2.2K times at the time of writing. Burry was supported by many people on Twitter.
One user wrote: “It’s true that the Fed would like to ease back again.” Another commented: “Not only the Fed. Take a look at the other central banks around the globe raising rates at similar times, and at similar basis points. Canada and China increased their rates by 50bps on the 24th of each month. They believe it will work without major collapse. A third user said, “Anyone who doesn’t blame the Fed [for out-of-control housing inflation] is gaslighting.”
According to data released this week, the rate of U.S. inflation rose to an all-time high of 8.5% in March. It showed no signs of slowing down. Many people believe that inflation is worse than reported.
Peter Schiff, a gold bug, commented Thursday that “according to the government March consumers prices rose by 8.5% YoY. The prices we pay for stuff we import or make ourselves are what makes up consumer prices. However, March YoY export prices increased 18.8% and import prices rose 12.5%. This is an average increase of 15.65%!
James Bullard, the president of the Federal Reserve Bank of St. Louis has repeatedly warned the Fed to raise rates faster to combat inflation. According to Bullard, it is “fantasy” to believe that the Fed can reduce inflation sufficiently without increasing rates to a level that restricts the economy.
Federal Reserve Governor Christopher Waller believes inflation peakedin February. He stated Thursday that he believes this is the peak. It will start to fall.”