John Hussman The policy error the Fed made by abandoning a systematic policy

“Systematic,” in this context, means a framework where policy tools such as the level of the fed funds rate maintain a reasonably stable and predictable relationship with observable economic data such as inflation, employment, and the “output gap” between real gross domestic product and its estimated full-employment potential. 

In 1993, Stanford economist John Taylor proposed a systematic framework

The Fed has encouraged a decade of yield-seeking speculation, as investors try to avoid being among the holders of $6tn in zero-interest hot potatoes... an all-asset speculative bubble that may now leave investors with little but return-free risk. 

Valuations still stand near record extremes. 

John Hussman FT 26 January 2022

https://www.ft.com/content/ece92145-443d-4e94-bfa9-7fe06cb9c00a

When the time comes to ask the question – “What triggered the crash?” – remember that this is the least important question. A market crash requires nothing more than a shift in investor psychology from careless speculation to even modest risk-aversion.  

Hussman 2021-07-16

https://englundmacro.blogspot.com/2021/07/what-triggered-crash-hussman-funds.html

Who’s Afraid of Rules-Based Monetary Policy?
John B. Taylor

https://englundmacro.blogspot.com/2020/10/whos-afraid-of-rules-based-monetary.html