Having previously warned that The Fed's "fixation with the markets has created a deadly trap," [5] and recently noted that "Central Banking has lost its way," [6] Stephen Roach unleashed a few minutes of painfully honest truthiness on an unsuspecting Kelly Evans at CNBC. The brief interview reiterates Roach's previous comments, as Tim Iacono notes, [7] that "it didn't have to be this way." The Fed "is in total denial," Roach rants, adding that it "hasn't learned the lessons of what it put the world through a decade ago."
Roach in 2005 (via Morgan Stanley) [8]:
"It didn’t have to be this way. The big mistake, in my view, came when the Fed condoned the equity bubble in the late 1990s.
It has been playing post-bubble defense ever since, fostering an unusually low real interest rate climate that has led to one bubble after another.
And that has given rise to the real monster -- the asset-dependent American consumer and a co-dependent global economy that can’t live without excess US consumption.
The real test was always the exit strategy."
Nothing ever changes...
