No one knows for sure what’s going to happen next. This may sound obvious, but it’s surprisingly hard for economists, especially one who is often lecturing on-stage, to admit. We pundits enjoy the thrill and attention that comes from bold predictions. And when we’re on stage or the television, we feel pressure to be authoritative. This pressure – and perhaps a little ego – lead us to speak with more confidence than perhaps we feel.

Baron Rothschild famously advised investors to “Buy when there’s blood in the streets even if the blood is your own.” This seemingly counterintuitive advice is anything but. When market participants are scared, prices will be driven by anger, regret, blame and fear. These emotional inputs to short-term price fluctuations create opportunities for clear-headed investors. Warren Buffett and Charlie Munger attribute their investment success, in part, to being fearful when the market is greedy and greedy when the market is fearful.

We are quick to criticize other countries’ regulatory and fiscal missteps, but it would be foolish to imagine the US Federal Reserve and our other institutions are not similarly capable of self-harm. It could be out of ignorance, hubris, or politics. Regardless, the coming stagflation is cause for concern in the US.