Gerstner says the Fed made a clear mistake in summer 2021 by not seeing inflation coming.
“But by the summer of twenty one, when the Fed was saying they don't see inflation, that was clearly a mistake.”
Gerstner argues the Fed made a knowable mistake ignoring 20x shipping cost increases in summer 2021.
“The cost of a container from China to The US had gone up 20x. Okay. The idea that we didn't have an inflation problem in the summer of twenty twenty one”
Gerstner says cargo container costs increased tenfold by June 2021 when inflation was evident.
“June 2021, when the world knew inflation was here. I mean, the cost of a cargo container had gone up by 10 x.”
Gerstner argues used car prices jumped from $20,000 to $29,000 due to stimulus.
“The price for a used car was $20,000 for ten years. And then just coincidentally, alright, they give us a bunch of Red Bull and the price goes to $29,000.”
Gerstner reports the Fed expects 2% negative real rates by year-end, with 4.3% inflation and 2.3% ten-year rate.
“They said we expect inflation exiting the year to be 4.3 and we expect the ten year to be around 2.3.”