The "big short" prototype: The Fed has lost all credit, and the increase in the cost of other goods will be permanent

The archetypal characters of the movie "The Big Short" slammed fed officials for the stock speculation scandal and sounded the alarm bell of inflation.

This article originated from Sina Finance

Michael Burry, the archetype of the movie "The Big Short," tweeted this week to lash out at the stock speculation scandal by senior Federal Reserve officials and warned of inflation threats with Costco price increases, but shortly after deleted those tweets, as he has done many times this year.

In a now deleted Tweet, Bury said:

"The bond and stock markets depend on a fed that has lost its credibility completely."

He referred to the Fed's mismanagement of the global financial crisis, its decision to cut interest rates three times in 2019, and the news in September that the bank's two regional Fed chairmen, Robert Kaplan and Eric Rosengren, bought and sold stocks and other securities last year.

Bury's tweet was accompanied by a screenshot of Kaplan's latest financial disclosure form, showing the official trading millions of dollars worth of Tesla, Chevron, Johnson & Johnson and other stocks in 2020. Kaplan and Rosengren both announced their resignations this week, with Rosengren resigning citing health problems.

Bury has been warning of a huge bubble in U.S. stocks in recent months and predicting a great crash that is "the mother of all crashes." In a recent tweet, he also sounded inflation alarm bells, writing:

"Inflation thinking is not something you want to go short, don't believe ask the good market."

Costco, the largest warehouse affiliate in the United States, recently resumed limiting purchases of necessities like toilet paper. Richard Galanti, the company's chief financial officer, noted on last week's earnings call that the cost of commodities such as oil, coffee and nuts is rising. He cited a range of inflationary pressures, including rising prices for labor, freight and commodities. He also noted shortages of products such as containers and computer chips, increased demand for transportation, and delays at shipping ports.

Garanti also warned that the increase in freight and other commodity costs would be permanent, and said Costco has passed those increased costs on to consumers by raising prices. His remarks challenged the Fed's assertion that the recent inflation spike was "temporary," in line with Bury's view.

Source: Sina Finance