“Hedge fund billionaire Paul Tudor Jones, who called the October 1987 crash, believes markets are in a dangerous financial bubble thanks to Federal Reserve’s ‘obsession’ with inflation targeting.
The investor lambasted what he called an ‘arbitary’ 2 percent inflation target set by the central bank, a goal he views as both outdated and dangerous.
‘We are in the throes of a burgeoning financial bubble,’ Jones warned clients in a note obtained by CNBC. ‘In the U.S., this obsession on inflation targeting has lately been taken to a new level as former Fed Chair Ben Bernanke has floated the idea of a price-level targeting mandate for the Fed. That means the central bank would allow inflation to remain above 2 percent to “make up” for periods when inflation is too low.’
His warning to clients came on Feb. 2, the day when a chaotic sell-off in the market began…”
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