The Markets See Stagflation
On Sunday’s podcast, Peter recaps the economic excitement from the tail of last week and the weekend. He starts by analyzing the market’s downturn from Friday and then proceeds to cover more government waste, global interest rates, and the Fed’s policy path moving forward into 2025. He concludes by discussing the legacy of his late father, Irwin Schiff.
To kick off the episode, Peter explains the news that sent markets into a tailspin last week:
What was the news that drove the stock market down on Friday? And I think it’s more confirmation of stagflation, which is exactly what I have been predicting all along. And of course, stagflation is the one economic condition for which the Fed has no contingency plan. When Powell was asked what his plan was for stagflation, he knocked wood. He banged on the podium. And he said, well, we’re just going to hope we don’t have it. Well, hope is not a plan. But the reason the Fed doesn’t have a plan is because there’s nothing in their toolbox that will work.
Peter critiques the Federal Reserve’s overreliance on inflation expectations, a tactic he compares to misguided faith in a self-fulfilling prophecy:
Now, the Federal Reserve puts a lot of stock in expectations. Powell says that all the time, right, because these guys think that inflation is like the field of dreams. If we build it, they will come, righ
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LewRockwell.com is a libertarian website that publishes articles, essays, and blog posts advocating for minimal government, free markets, and individual liberty. The site was founded by Lew Rockwell, an American libertarian political commentator, activist, and former congressional staffer. The website often features content that is critical of mainstream politics, state intervention, and foreign policy, among other topics. It is a platform frequently used to disseminate Austrian economics, a school of economic thought that is popular among some libertarians.
