Masters in Business: Paul McCulley, former PIMCO Chief Economist, Demands Apology on Behalf of the Fed

This week we speak with Paul McCulley, former chief economist at PIMCO, and oft mentioned FOMC candidate.

McCulley worked closely with Bill Gross at PIMCO for many years, and was brought back to PIMCO after Mohamed El Erian stepped down. He coined such well known phrases as “Shadow Banking System” and “The Minsky Moment.”

McCulley noted those who claimed QE and ZIRP were going to cause inflation and the collapse of the dollar were totally wrong, and he demanded these critics of the Federal Reserve owe former Ben Bernanke an apology. Had the Fed Chief listened to them, we would have found ourselves in a modern day depression.

He is leery of those who believe the Government and Federal Reserve should have let the crisis run its course on its own, with zero interventions. He is especially harsh on the Austerians, whom he said made the recovery weaker than it need be by thwarting traditional Keynesian stimulus.

The full podcast is available on iTunes, SoundCloud and on Bloomberg.  Earlier podcasts can be found on iTunes and at

Next week, we speak with Harry Shearer of The Simpsons, Spinal Tap and SNL.


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  1. machinehead commented on Sep 1

    Speaking of apologies, looks like Fed Vice Chair Stanley Fischer is headed for a showdown with Mr Market — who doesn’t want an apology, but capitulation on rate hikes.

    Stocks got whipped like a broken-down mule today, in what traders are starting to call the ‘Fischer break.’ Since Fischer’s remarkably doctrinaire screed delivered last Saturday at J-Hole, the S&P 500 has slid 75 points.

    Today’s Fischer Break rhymes oddly with 1929’s Fisher Break, which occurred after prominent economist Irving Fisher averred that stocks had reached a ‘permanently high plateau.’ That plateau promptly experienced a landslide.

    Despite his unfortunate attempt at market timing, Irving Fisher actually was a quite creative economist, who brought mathematical rigor to a field that mostly used rhetorical argument in the 19th century.

    As for Stanley Fischer, his dictum that ‘we should not wait until inflation is back to 2 percent to begin tightening’ likely will go down in history as an epic misjudgment.

  2. end game commented on Sep 2

    Yes, let’s. Then Desi can join in the apology.

    Austrians are masters of the glib comment, like “I’ll be correct in a year.”

    Even when the apology comes, it won’t do anything for the families whose lives were destroyed by unemployment.

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