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yeah it links quite well to my uh next question which is uh actually you've released some uh work recently which talks about your opinion or what what the FED is doing so if I if I quote it and I think I heard uh you talk about this in another interview which I really enjoyed so the quote is in my opinion the FED is actually misleading the public by pretending that it's tightening monetary policy when in reality it is Ping policies which are likely to increase inflationary pressures and to depress real wages which seems to be like what we're talking about now so in your opinion how how is the Fed doing this because I guess traditional people would say they're increasing interest rates they're doing quantita quantitative uh tightening they are tightening yes uh this is a the conventional view but I can tell you instead of listening to the words of fed officials I think by looking at the market action uh you can get some Clues whether money is tight or not uh one thing is clear when money is tight and by tight I mean really tight uh high yield Bond spreads Visa treasuries explode in other words you would see a huge increase in spreads this hasn't happened yet uh the spreads have actually uh been very steady at a low level compared to previous financial crisis when the money became tight secondly when money is really tight you have very little speculation hasn't happened yet there's this flurry of speculative activity in anything anything that seems to be moving the money flows in the money flows out there's plenty of liquidity now if you tell me that the worker in America uh is suffering from less liquidity because he has real wages that no longer cover his expenses and that he has to wait for his salary to arrive at the end of the month in order for him to pay the bills that is I would agree with but in the financial Market I don't see any tightening of liquidity also the index the volatility index for shares uh is low actually last week when the market rallied the VIX Index fell by 37% this is a sign that liquidity isn't tight now I'm not uh an expert on how to measure precisely where the money is allocated but just looking at these uh indicators would suggest to me that liquidity isn't tight enough also if you think about say turkey the rate of inflation in Turkey say 100% deposit rates are also around 100% so is money tight in turkey or not interest rates are high but but this is something that Milton fredman already explained very carefully the absolute level of interest rate does not tell you whether money is tight or not we could have high interest rates uh but no Tight money and in the 70s because I started to work precisely in January 1970 so I experienced the end of the 1970 bare Market the recover into January 73 and the bare Market 7374 and the recovery and the gold bull market commodi bull market and the inflation acceleration throughout the 70s now with the inflation it was like this in 74 the 10 years treasury yield was already over 12% but then inflation cooled down in 70 in the second half of 7475 and until the summer of 76 and after the summer of 76 inflation accelerated again so uh was money tight it became tight in the recession 7374 but only for a brief period of time the 70s were characterized by interest rates being negative in real terms in other words money never was really tight until fuler squeezed the system in 1979 1980 and they pushed interest rates on the short end to over 20% so then money became tight and we had a period of disinflation that followed in my view uh looking at the market action uh m is tight at the present time
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