Ambrose Evans-Pritchard, A knee-jerk inflationist who believes in money creation as a solution to recessions, has pointed to a report by the Federal Reserve Bank of Richmond. The charts indicate recession is here in that district.
The indicators are worse than they were in early 2008. We all remember the second half of 2008.
But remember, the GDP data was massively wrong at the inflection point in early- to mid-2008. The first read of Q2 2008 was solid growth of 1.9pc. Only later did it become clear that the US recession began in late 2007, and was much deeper than originally thought.
The Richmond survey is grist to the mill of bears at the Economic Cycle Research Institute (ECRI) and others who insist that the US tipped into recession in the late spring (under the NBER official definition).
He thinks the printing press is the way out. He always does.
Needless to say, I will be advocating 1933 monetary stimulus à l’outrance, or trillions of asset purchases through old fashioned open-market operations through the quantity of money effect (NOT INTEREST RATE ‘CREDITISM’) to avert deflation – and continue doing so until nominal GDP is restored to its trend line, at which point the stimulus can be withdrawn again.
The question is this: Will the Federal Open Market Committee agree with him. So far, it hasn’t. It has been deflating this year.
Eventually, the FED will inflate. But it won’t until the recession is visibly here.