“This may be a new inflation cycle coming so the Federal Reserve would need to raise interest rates which will be a disaster for financial markets. If you raise interest rates to head off a real inflation threat then hang onto your chairs,” Douglass said.
“It is foreseeable that higher bond yields and inflation will put pressure on markets and people will ask if the Fed has got it wrong.”
“The long-term question is if we could we get monetary-induced inflation? Will quantitative easing lead to a new paradigm? I don’t know about that, it is very foggy out there.”