“We have overstimulated the economy by a big factor” ~ Sam Zell
Billionaire investor Sam Zell told CNBC Squawk Box that he sees no reason to be optimistic that there won’t be further severe economic (recession) and market (bear market) pains. “We have overstimulated the economy by a big factor,” Zell remarked. “We have to take the punch bowl away.”
He thinks a liquidity crisis may be up next and believed the whole “inflation is transitory” political soundbite originating from the Federal Reserve and the Biden Administration several months ago was an embarrassment and the phrase should be relegated to the dust bin of history.
Free money–monetary quantitative easing and historically low interest rates–leads to excess which leads to recession, states Zell. It’s really that simple.
Markets will not bottom until all that excess loose money bleeds out of the economy and Fed tightens its monetary policy. The pain of recession and further market decline are needed and will be good for long term markets.
The Federal Reserve maintained a too loose and easy monetary policy for too long.
“If you get really good at what you do, you get the freedom to be who you really are.” ~ Sam Zell
References:
- https://www.costar.com/article/1152237605/real-estate-magnate-sam-zell-moonlights-as-economist
- https://www.agriculture.com/news/business/risk-and-reward-a-conversation-with-sam-zell
Sam Zell, founder and chairman of Agricultural Real Estate, used to joke that his father made a life-or-death decision when he was 34 years old, and then never made another mistake again. Zell was inspired by his father’s confidence.