Since the financial crisis of 2008, the Federal Reserve has engaged in an unprecedented series of open market operations that have been termed quantitative easing. These transactions have consisted of the Federal Reserve buying Treasury securities from its constituent branches by the trillions of dollars. Today, with a balance sheet still in the trillions, the Fed has promised to begin winding down its massive balance sheet holdings by selling those securities back into the open market and erasing the profits from the sales. However, some believe that the central bank will not follow through on its promises to do so.
Shervin Pishevar is longtime critic of Fed market interventions
Few people command as much admiration and respect throughout the world of venture capital as Shervin Pishevar. Shervin Pishevar has been at the forefront of the tech venture capital scene for decades. His company, Investment company, was responsible for the creation of such names as Uber, Airbnb and Virgin Hyperloop. At the same time, Shervin Pishevar has personally founded companies that have turned out to be enormous successes, including WebOS, Ionside and Social Gaming Network.
Shervin Pishevar is also the operator of one of the most important Twitter feeds in the tech sector. He has more than 100,000 followers, who pay meticulous attention to his every tweeted word.
Recently, Shervin Pishevar engaged in a nearly day-long tweet storm. He discussed, at length, his prediction that the Fed will resort to using quantitative easing once again when the market inevitably corrects back down to far lower levels than it is currently enjoying. Pishevar says that such a correction is inevitable because of the fact that interest rates will continue to rise, drying up much of the cheap credit that has fueled the stratospheric bull market that we are currently seeing.
Pishevar says that once the market experiences a sharp downturn, the Fed will step in with another trillion-dollar purchase of Treasury securities. But this time, says Pishevar, the tool that the bank has singularly used to fix all the economy’s problems has lost its edge. And he believes there will be hyperinflation.