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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (74185)11/16/2006 2:57:54 AM
From: bart13  Read Replies (3) of 110194
 
Hussman hasn't exactly got a sterling investment record lately, and his lack of understanding of the Fed is the cause of much of it. The few times I've read Succo, I've been greatly underwhelmed.

I did an analysis of that article he wrote about the Fed over on iTulip a while back - post #21 at itulip.com .

And I wasn't trying very hard. Its a bit pitiful how someone like Hussman can underestimate and so wrongly attribute actions or lack of actions of a central bank of a entire country.

There is so much unused power that the Fed has to encourage credit growth that I'm surprised anyone would think that they can't affect it. Be careful here and don't assume that I'm saying that sometimes they don't want credit growth to slow down, or that they're anywhere near in perfect control of credit and credit demand - they're not.

But, given a lag, the Fed can cause very high credit demand in environments like now any time they want to... and they've done it for decades - including the '30s. With only one exception since the '30s (the late '40s), credit growth has never even gotten close to a zero rate of growth... and I don't believe it will be different this time.
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