Cathie Woods Thinks Current Policies May Trigger Another “Great Depression”

Cathie Woods thinks that the Fed should improve new policies.
The Ark Invest points towards situations similar to the Great Depression.
The Great Depression remains the worst economic downturn in history.

Fed Needs to Work on The Policies

This year has already proven as disastrous as it could be for the crypto sector as well as the global economy, but who knows the future. Cathie Woods, CEO of Ark Invest, thinks that the Federal Reserve needs to improve the current economic setup. It can result in a situation similar to The Great Depression in 1929, and Tesla CEO Elon Musk agrees with it.

She posted a Twitter thread where she explains that if inflation is ending, then we may be entering a new era similar to the ‘Roaring Twenties’. She says that this era is identical concerning the emergence of new technologies like electricity, combustion engine and telephone.

The world suffered from the Spanish Flu and World War I before getting into the worst economic downturn in history. The events had a negative impact on people globally. Cathie thinks that the current combination may lower the inflation significantly and give a push to innovation in a Twitter thread.

She addressed the time when global inflation peaked to 24% in June 1920 but plunged by 15% just after a year. The Fed increased interest rates from 4.6% to 7% during 1919-20, much lower in contrast to the 16-fold increase currently. The Federal Reserve eventually lowered the interest rates back to 4% in 1922, which sparked what we call the Roaring Twenties. Dow Jones Industrial Average compounded by 25% annually from 1921 to 1929.

Finally, she says that the Fed must discuss the persisting policies to tackle the possible chaos analogous to The Great Depression.

If inflation is unwinding, as we believe, then we could be heading back to the future, the Roaring Twenties, the last time several general purpose technologies evolved at the same time: telephone, electricity, and the internal combustion engine. The setup is remarkably similar!
— Cathie Wood (@CathieDWood) November 12, 2022

Source: Twitter

A Peek Back To The Great Depression

The Great Depression is believed to emerge from harsh take on by the US authorities towards monetary policy centered around restrictions on stock market forecasts. Stock market exploded during 1921 to 1929 where the Fed finally stepped in to depress the appreciating share prices.

This was followed by the banking panics in the United States as the citizens started losing the trust in banks’ solvency. The scene would go on until the winter of 1933 and came to an end with Franklin D. Roosevelt, 32nd US President, announcing a national bank holiday in the country. The period rained havoc on the entire banking system in the United states.

Another cause behind The Great Depression experts believe was the gold standard. They think that the Fed allowed the reduction in money supply to preserve the gold standard. Others think that the economic downturn was born due to international lendings to Latin America and Germany which might have led to reduction in credit and output in the borrower nations.

Source: https://www.thecoinrepublic.com/2022/11/14/cathie-woods-thinks-current-policies-may-trigger-another-great-depression/