The Day the Markets Roared: How a 1982 Forecast Sparked a Global Bull Market

Kaufman (Tectonic Shifts in Financial Markets) was for decades one of the leading economists on Wall Street, but his greatest claim to fame comes from what happened on a single day. In the 1970s, the U.S. economy suffered from high inflation and, unexpected by Keynesian orthodoxy, high unemployment as well. During this period of “stagflation,” as it was called, Kaufman built a reputation for pessimistic forecasts on interest rates, to such an extent that a critic called him Dr. Doom. He altered course in a memo written on August 17, 1982, where he predicted that interest rates would fall; the memo sparked a massive rally in the stock market. Kaufman gives us a detailed account of not only what transpired the day he wrote the memo, but also his career as an economist at Salomon Brothers, and the basic principles of his economic outlook. Kaufman writes here that financial stability is essential to the preservation of a free economy, which causes him to look once more with pessimism at the U.S.’s COVID-19 economy.