Cathie Wood lashes out at Powell: “He’s making a mistake”

Cathie Wood Jerome Powell
  • The investor took aim at the Fed chairman and stated that his decisions will lead the US economy into deflation.
  • On her Twitter account, the head of Ark Invest criticized Powell’s stance of comparing the current situation to the one Paul Volcker faced when he was Fed chairman from 1979 to 1987.
  • “Inflation is turning into deflation. One of the best indicators is that the price of gold peaked more than two years ago in August 2020 at $2,075 and is now down 15%,” Wood said.
  • In addition, he assured us that inflation will go down much more due to the large amount of inventory that retailers have. They will have to lower their prices “to clear the shelves.”

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Cathie Wood once again publicly commented on her disagreement with the policies being carried out by the chairman of the Federal Reserve, Jerome Powell.

“The Fed is basing monetary policy decisions on lagging indicators: employment and core inflation. Leading inflation indicators like gold and copper signal the risk of deflation. Even the price of oil has fallen more than 35% from its peak, erasing most of this year’s gain.

Cathie Wood.

The director of Ark Invest criticized Powell’s comparison of the current inflationary period that the country is going through with the one that former Fed Chairman Paul Volcker faced during his term between 1979 and 1987.

“At Jackson Hole, Chairman Powell invoked Volcker’s name twice directly and twice indirectly. Today’s COVID inflation is nothing like the 1970s inflation that started with ‘guns and butter’ in 1964, and accelerated after Nixon ended the gold exchange standard in 1971.”

Wood.

He further commented that “it was not until Volcker took office in 1979, 15 years after the Vietnam War and the Great Society began, that the Fed attacked inflation decisively.” For this reason, it is that the investor was withering: “Powell is using Volcker’s hammer and, I think, he is making a mistake”.

One key difference Wood noted is that today the Fed has raised federal rates 10 times, from 0.25% to 2.5%, while Volcker raised them from 10% to 20% in the early 1980s. “Consumers and businesses had been adjusting for inflation for 10 to 15 years. Instead, today they are in shock. Also, housing is falling apart.”