Hawkishness Is In The Eye Of The Beholder, Part Deux

February 17, 2023

“Once inflation gets above 5% it’s never come down unless fed funds have gotten above the CPI.” –Stan Druckenmiller

As I first noted here a couple of months ago, despite the Fed’s aggressive rate hike campaign over the past year, the funds rate remains below CPI. As such, it’s hard to call current policy “hawkish” in the context of history. In fact, on this basis the fed funds rate has now been negative in real terms for nearly 40 months running. Only in the aftermath of the Great Financial Crisis have we ever seen a longer stretch during the post-war era. Of course, this was understandable at the time because the disinflationary impulse of the crisis enabled an extreme monetary response. Today, in contrast, inflation is running at its hottest levels since the Great Inflation of the 1970’s and early-1980’s. And back then, Arthur Burns didn’t even manage to pull off such a feat of protracted dovishness.


Jesse Felder worked for the largest firm on Wall Street, co-founded a multi-billion-dollar hedge fund and has been active in the markets for over 20 years. He is author of Fire Wall Street: Empower Yourself and Become Your Own Financial Adviser and producer of the podcast Superinvestors and the Art of Worldly Wisdom.

Gold is the world’s oldest and most known currency.
Top 5 Best Gold IRA Companies

Gold Eagle twitter                Like Gold Eagle on Facebook