A renowned 30-year market vet breaks down why the Fed could be making the ‘worst error in central bank history’ – and predicts 7-10 years of negative returns for stocks

• John Mauldin is warning that easy monetary policy is setting stocks up for “extreme” volatility.
• He said in a recent note that there is “significant” potential for another taper tantrum ahead.
• Mauldin said he expects negative returns for the S&P 500 over the next seven to 10 years from current levels.

The Federal Reserve has kept its foot on the gas pedal of easy monetary policy since March 2020.

Its aim? To get the US labor force back to what it deems “maximum employment.”

What that looks like exactly is unknown – perhaps it’s a return to the pre-pandemic unemployment rate of 3.5%, a 50-year-low, and far from the current rate of 5.8%. In trying to achieve this, Fed Chairman Jerome Powell has created a new paradigm at the US central bank, one that places more focus on greater inclusion of those on the lowest rungs of the economic ladder.