Fed's Policy Errors: The 1970s Playbook Returns!

Danielle DiMartino Booth watched the Federal Reserve make decisions from the inside. She says what is happening right now is the most dangerous monetary policy repeat in half a century. The 1970s playbook is back. 🌐

📉 THE PARALLEL — In the 1970s the Fed faced an oil shock that pushed inflation higher while growth collapsed. Fed Chair Arthur Burns refused to raise rates aggressively enough believing the shock was temporary. Inflation embedded itself into wages and expectations. It took Paul Volcker hiking rates to 20% to break it. The cure was worse than the disease.

⚠️ THE REPEAT — Today the Fed faces an oil shock from the Iran war pushing inflation toward 4%. Growth is slowing. Unemployment is rising. The Fed is frozen — unable to cut without stoking inflation and unable to hike without killing growth. DiMartino Booth says this is not a coincidence. It is a pattern. And the Fed is making the same mistake Burns made.

🔍 THE DANGER — Every week the Fed waits inflation expectations drift higher. Once they become unanchored the only cure is brutal. The 1970s took a decade to fix.

History is not repeating.

But it is rhyming loudly.

Full interview on the WTFinance podcast 🎙️

#Fed #Inflation #Macro #WTFinance #Investing

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