Lacy Hunt – Fed Policy is Destroying Growth

The Fed and its loose monetary policy are to blame, according to Lacy Hunt, for high inflation, excessive risk taking, slow growth and other maladies afflicting our economy.

Hunt, an internationally known and award-winning economist, is executive vice president and chief economist of Hoisington Investment Management Company (HIMCO), a firm that manages $4 billion in pension funds, endowments, insurance companies, and others.

Hunt was a keynote speaker on May 3 at John Mauldin’s Strategic Investment Conference, which I attended virtually.

I have heard Hunt speak many times, and his articulation of the historical research – especially econometric studies – on the effects of fiscal and monetary policies is exceptional. The theme of this talk was consistent with his prior presentations. I’ll go through his thesis and then offer some reasons to question what he said.

Before I do that, however, let’s look at what Hunt said at this same conference a year ago. Hunt wrongly predicted that there would be a recession in 2022. He warned, “The degree of financial risk is greater now than at any time in modern times.” Nothing happened in the year since he spoke to validate that warning. The series of bank failures, starting with Silicon Valley Bank (SVB), were far less consequential than, for example, the failures during the dot-com and housing crashes.