Wednesday Show Note

As the world of finance, economics and markets await the now all but presumed rate hike via the Federal Reserve. I just wanted to post an excerpt from prior article I wrote way back in 2016, that was well read across the entire business/financial media complex. The reason why I’m posting it is two fold.

First…

To show precisely what I was chronicling back then, why, and the subject matter that someone like myself was ridiculed for even bringing it up because, after all, I didn’t have a PhD in economics therefore “I know nothing!” (channeling my best Sgt. Schultz of yesteryear TV fame.)

Second…

I’ve now been proven correct in both premise and final results against the entirety of said “PhD set.” “How?” you ask. Fair question, so, without further adieu…

Via Robin Brooks of the Institute of International Finance on May 3rd via his Twitter™ feed…

(Image Source)

Look at the above chart and notice the year of the lowest.

Now, here’s that excerpt from me writing on October 5, 2016. To wit:

Media outlets such as the FT and others speak to a very specific crowd. i.e., (Ph.D economists, policy wonks, central bankers, et al.) And that crowd knows precisely what R* is and what it means. What I find interesting is just how often this once little known text-book equation and theory has now been referred to by not only The Fed, and in particular: Janet Yellen – but the entire global monetary spokespersons, along with the media and sycophantic think tanks that follow them.

This once obscure economic equation has now practically jumped into every current conversation today as it pertains to monetary policy. Suddenly, it’s everywhere. Nearly every conversation over the past few months whether it be television, radio, or print pertaining to monetary policy can no longer go more than a few minutes without delving into “the neutral/natural rate.” e.g.: R* Even next-in-rotation fund managers have gotten in on the R* jargon bandwagon. And to my thinking – it rings the alarm-bells louder and louder with every increased mentioned.

“R*: Welcome To the Rock Star of Central Banking Lunacy”

“Why do I post the above?” some may ask. I do it only for the reason as to show when I say “I have the receipts” (aka in my archives) that I actually do and I’ve been discussing and arguing some of the most important monetary policy decisions in history, in real time, and against the very people who said they knew and a person like myself hadn’t a clue.

It seems I had far more of a clue than most.

But then again, I’m not on TV, right? So…. (Cue Sgt. Schultz clip here also)

© 2022 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.