Maybe Zervos should quit his job and trying working for Starbucks as a barista.
“Jefferies economist David Zervos has been bullish throughout this whole rally, arguing that Ben Bernanke has had everything under control, keeping markets steady, and providing proper stimulus to the economy.
His latest note to clients is probably one of his most important yet, as it’s addressed to the perma-bears that hate any notion of easy money, the Fed, or stimulus, and who argue that we’re just in a sugar high period that will all come crashing down.
You know who these people are that he’s talking about, even though Zervos doesn’t mention them by name: Rick Santelli, ZeroHedge, Jim Grant, etc.
CNBC screengrab
In his note, Zervos writes:
I actually feel a bit sorry for the bears. They have warned us for years about the dangers of central bank balance sheet expansion and monetary accommodation. And their “elite” have even banded together in the WSJ to sign protest petitions against QE. But the spoo keeps rising, jobs keep getting created and wealth keeps getting generated (at least for those who didn’t follow the bears’ ill-conceived advice). I feel sorry for them because they are simply living in the dark ages of monetary policy theory. They are stuck thinking like witch doctors rather than modern medical doctors.
What does he mean, specifically?
What he’s saying is that these policy bears argue that we need a hard dose of Austrian-economics, Great Depression-style pain to clear out the “rot” from the system. And that after we’ve taken our lumps and inflicted pain on ourselves (sending unemployment to over 10% in the process), then we can start to form a true recovery that’s not built on debt and low interest rates.
But that’s misguided.
Zervos offers a great medical analogy…”
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