From the SMH and my favourite strategist, Jeremy Grantham:
Legendary investor Jeremy Grantham says the US Federal Reserve is killing the recovery of the world’s biggest economy and the ”next bust will be unlike any other”.
…”We invest our clients’ money based on our seven-year prediction,” Mr Grantham told Fortune.
”Over the next seven years we think the market will have negative returns. The next bust will be unlike any other because the Fed and other central banks around the world have taken on all this leverage that was out there and put it on their balance sheets. We have never had this before.
”Assets are overpriced generally. They will become cheap again. That’s how we will pay for this. It’s going to be very painful for investors”.…”It’s quite likely that the recovery has been slowed down because of the Fed’s actions,” he said.
”Go back to the 1980s and the US had an aggregate debt level of about 1.3 times GDP. Then we had a massive spike over the next two decades to about 3.3 times debt. And GDP over that time has slowed.”
…”By now the depths of that recession would have been forgotten, the system would have been healthier, and we would have regained our growth.
”In the economic crisis after World War I there was no attempt at intervention or bailouts and the economy came roaring back.”
