We have four interns this year. At the start of their internships, we required that they read “How the Economic Machine Works” by Ray Dalio. The paper discusses how central bankers have certain levers they can pull, such as raising and lowering interest rates and other tools to speed up or slow down the economy.
I told them that I’m thrilled our fixed income strategies are doing well yet the unprecedented central bank experiments have so distorted price discovery that I just don’t know if I should scream or shout. I’m concerned that the Fed has boxed itself into a Keynesian corner.