That Inflationary pressures October given the impact on Fed monetary policy, investors have reason to cheer. Invest Ark founder Cathie Wood took to Twitter on Saturday to offer her hiring about the inflation outlook.

A serious policy mistake: Inflation is easing, Wood said. If her conclusion is correct, the economy could return to the future with the ‘Roaring Twenties’, when recently several general-purpose technologies, namely the telephone, electricity and the internal combustion engine, developed simultaneously, she said adding the setup is remarkably similar .

Before the Roaring Twenties, there was World War I and the Spanish flu, Wood noted.

“While both have had more severe impacts on the global economy, today’s combination is a powerful echo that could lead to much lower-than-expected inflation and a boom in innovation,” the asset manager said.

The aftermath of both of these negative developments has been a supply chain shock and other challenges that have pushed inflation above 20%, with inflation peaking at 24% in June 1920 and then steeply falling to -15% in June within a year declined in 1921, she said.

“We wouldn’t be surprised if broad-based inflation turns negative in 2023,” she added. Wood called the Fed’s current policy stance a “grave error”.

While noting that the Fed raised interest rates less than 2-fold in 1919-20, from 4.5% to 7%, she said the current Fed has raised interest rates 16-fold despite much lower inflation.

See also: Has the fall in CPI inflation impacted the outlook for interest rates?

Fed ignores deflationary signals: If the Fed doesn’t turn now, a situation similar to 1929 will ensue, Wood said. She found that the Fed raised interest rates too quickly in 1929 to put an end to financial speculation. The Smoot-Hawley Tariff Act passed by Congress, which imposes over 50% taxes on more than 20,000 goods, also plunged the world economy into the Great Depression, she added.

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