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Federal Reserve Chairman Jerome Powell has been anguished by rising inflation for more than two years. And despite having had some success in controlling consumer price increases that reached a four-decade high above 9% in June 2022, the Federal Reserve chair reiterated in Congress testimony this week that continued progress is “not assured.”
But don’t worry: Barry Sternlicht, the outspoken billionaire co-founder and CEO of real estate giant Starwood Capital, has a solution to Powell’s biggest problem.
“What you really need to do is cross the street and tell Congress to stop spending money like drunken sailors,” Sternlicht said in a new statement. interview on the globally distributed television show In depth with Graham Bensinger.
While the Federal Reserve has been trying to curb inflation with interest rate increases, Sternlicht — in his typical, somewhat scathing style — noted that Congress and the Biden administration have made that task a challenge by dramatically increasing spending. federal and national deficit, at least compared with the pre-COVID era.
“We have one part of the government with one foot on the brakes (the Fed and Powell) and then we have the other part of the government (the legislature) spending all the money they can,” he said.
Sternlicht, who began his career as a Wall Street trader and now boasts With a net worth of $3.8 billion, he has long argued that the Federal Reserve’s main method of dealing with inflation—raising interest rates—simply doesn’t work.
Last March, the billionaire CEO said central bank interest rate increases were like “using a steamroller to lower the price of milk by two cents” or “killing a small fly.” Just a few months after that, Sternlicht warned that the real estate industry, particularly the office industry, was in the midst of a “Category 5 hurricane” due to Federal Reserve policy. And in October 2022, he even said Fortune that Jerome Powell and his “merry band of lunatics” were destroying the economy and risking “social unrest.”
However, now that the economy is proving resilient despite higher rates, Sternlicht appears to have changed his mind. Instead of destroying the economy, the Federal Reserve’s rate hikes haven’t done enough, he says.
“Higher interest rates are not slowing the economy. “People think they are, but they’re not,” Sternlicht told Bensinger. “Because if you look at the labor market, it’s healthcare, government and education that are adding tons of jobs and they’re not affected by interest rates.”
Sternlicht argued that interest increases are an “arcane” and inappropriate method of combating inflation. But instead of warning that the U.S. economy is being destroyed by these rate hikes, he previously argued that “braking hard”, called rate increases “suicide,” and the list continues: Sternlicht now appears to believe that Powell’s tools are simply devastating key segments of the economy, including the one in which he operates.
When it comes to real estate, Sternlicht argued that we are going through a once-in-a-lifetime crisis. “I have gone through five or six crises. This one feels worse,” she said, adding that “we normally ruin the global economy, the real estate industry… This time we didn’t. “We were just collateral damage.”