Modern Monetary Theory Was The Fed's "Colossal Mistake": Lawrence Lepard
Larry explains, and writes about why gold miners are "silly cheap" right now.
Friend of Fringe Finance Lawrence Lepard released his most recent investor letter this week, with his updated take on, in his words, how the Fed is “losing”.
For those that missed it, I mentioned Larry in my most recent portfolio update, published earlier this week. I believe him to truly be one of the muted voices that the investing community would be better off considering. He gets little coverage in the mainstream media, which, in my opinion, makes him someone worth listening to twice as closely.
Larry was kind enough to allow me to share his thoughts heading into Q2 2023. The letter has been edited ever-so-slightly for formatting, grammar and visuals.
This is Part 2 of this letter, Part 1 was published yesterday.
MMT: THE FED’S COLOSSAL MISTAKE
The Fed has become trapped by its reliance on MMT (modern monetary theory). By relying on low interest rates and money printing, and allowing debt levels to explode, the Fed has no way out. They can’t allow the free market to rebalance because that would risk the economy imploding. So, their only hope is to pray that inflation does not persist, and continue using QE to generate economic growth. In other words, they want to keep kicking the can down the road and expanding our debt levels. This is their strategy. However, in our view, the jig is up, and the can can’t be kicked any further now that inflation has arrived.