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Thursday, March 28, 2024

Howard Marks: “Is It The Fed’s Job To Keep Market Dislocations At Bay Forever?”

Courtesy of ZeroHedge. View original post here.

Howard Marks, co-founder of Oaktree has emerged as the latest (billionaire) voice to criticize the Fed (after Carl Icahn did it earlier in the day) for cutting interest rates last month, according to an interview with Bloomberg TV. Marks believes that more monetary stimulus will simply boost asset prices further, which will just serve to widen the income inequality gap. To which, we and anyone can only respond: he is absolutely correct.

Sure, it's a relatively simple concept, but then again so is not racking up $22 trillion in debt and catalyzing debt bubbles that, depending on sector, are approaching or have already eclipsed levels seen before the 2008 Great Recession. 

Marks opens his latest memo to clients, dated July 26, asking, "…is it the Fed's job to sustain expansions and keep market dislocations at bay ad infinitum?"

With the bull market now passing a decade-long with record low unemployment, Marks says the economy simply doesn’t need the Fed's help. He argues that the rate cut last week will make it harder for people with less savings, and also lenders, to earn decent returns.

Marks said: "The process of lowering the rates causes assets to inflate. There will be more wealth piled up by the people who have assets and it’ll be harder for people who just have a little bit of savings to make a return."

Marks also appeared on Bloomberg to back up his stances from his memo (full video below).

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