Economist elerianm thinks a (self-inflicted) recession is coming. He spoke with jenwieczner about how bad it's likely to be and what he’s doing with his money now. (Spoiler: He’s not buying Bitcoin.)
El-Erian has some bad news – and some more bad news.It’s hard to remember a more pessimistic time in the market. The current bear market has already gone on much longer than the 2020 one, which — at just a month long — barely counts. And at the moment, both stocks and bonds are falling, anthat did not occur during 2008’s financial crisis or even during the dot-com bust.
Add on top of that, policy-makers who are supposed to help us navigate through this have become their own source of volatility. So if you put all these changes together, they are inherently unsettling. And we realize that we are much more fragile. I don’t know how to convey it, but we came very close to a financial accident in the U.K.A financial accident is something that turns finance from an enabler of economic prosperity to a major detractor of economic prosperity.
So if it is a self-inflicted recession, could it be on par with the severity of the Great Recession of 2008? The Fed needs to restore sufficient credibility, and right now, its credibility has really been hurt. I’ve never seen a central bank issue projections every quarter and former Fed officials say they are unrealistic and dismiss them. And people who worry most about hard landings will tell you that because the Fed looks at lagging data, it doesn’t realize how quickly the economy slows. And they’re not moving these things. So that’s the worry.bonds, which is rare.
Recently, people have noted that Bitcoin has seemed more stable than government currencies. So you don’t believe Bitcoin is going to be less volatile than fiat over the long term?
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