Bill Ackman says inflation is “out of control”

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Billionaire hedge fund manager and the founder and CEO of Pershing Square Capital Management Bill Ackman, says the US Federal Reserve is not doing its job as it should, even as inflation gets out of control.

The American investor also suggests that the Fed came late to the party and that the central bank’s monetary policies, as it stands, are in no way going to help address the runaway inflation.

Inflation is out of control. Inflation expectations are getting out of control. Markets are imploding because investors are not confident that the @federalreserve will stop inflation. If the Fed doesn’t do its job, the market will do the Fed’s job, and that is what

— Bill Ackman (@BillAckman) May 24, 2022

Stock market crash to catalyse economic collapse

According to Ackman, the latest dovish remarks from various Fed officials – both current and former – don’t change the fact that the central bank’s inflation pivot came a little too late. He suggests that the Fed needs to quit the waffling and get serious.

In his view, the only way the Fed can begin to tackle the “raging inflation” is via aggressive monetary tightening. If that does not happen, then the other way about it is for the economy to collapse.

With the S&P 500 close to a bear market after seven straight losing weeks, a bleak outlook suggests further losses and potentially a stock market crash. If this happens, the economy will collapse, destroying demand.

He said in a Twitter thread on Monday as US stocks fell again after starting off the week positively:

There is no economic precedent for 200 to 300 bps of fed funds addressing 8% inflation with employment at 3.6%. Current Fed policy and guidance are setting us up for double-digit sustained inflation that can only be forestalled by a market collapse or a massive increase in rates.

In short, Ackman says it’s time the Fed put the “inflation genie” back where it belongs – in the bottle. This, he opines, will help the market stem its downward spiral as investors return to the market knowing “the days of runaway inflation are over.”

But even as the Fed looks to battle runaway inflation, MicroStrategy’s CEO Michael Saylor says there’s more that’s wrong and that needs handling than simply adjusting the monetary policy.

Since the inflation is caused by a variety of government policies, it seems unlikely that simply adjusting monetary policy will cure the problem. The economy will still struggle due to foreign policy, domestic policy, labor policy, trade policy, medical policy, and energy policy.

— Michael Saylor⚡️ (@saylor) May 24, 2022

The S&P 500 was down 1.5% in early afternoon trading on Tuesday, while the Dow Jones Industrial Average had shed nearly 200 points. Nasdaq, with a sell-off in mega-cap stocks still on, was down 2.7%.

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