“In the field of monetary and credit policy, precautionary action to prevent inflationary excesses is bound to have some onerous effects— if it did not, it would be ineffective and futile. Those who have the task of making such policy don’t expect you to applaud. The Federal Reserve, as one writer put it after the recent increase in the discount rate, is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up.”
William McChesney Martin, Speech to Investment Bankers Association of New York, October 1955
Perhaps The Fed removes the punch bowl in Muriburi Land, but The Fed certainly didn’t remove the punch bowl in the USA. The S&P 500 index and commercial real estate have both exploded with the perpetual punch bowl.
“We’re not even thinking about thinking about the consequences of our actions.”
Jerome Powell, Chairman, Federal Reserve
Apparently, Chairman Powell lives in financial Muriburiland.
Thanks to Jesse at Jesse’s Cafe Americain for the quotes!