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The Fed is not serious and has no intention of eliminating runaway inflation. Bet that it will continue.
For MANY months now, 'US Federal Spending' and 'US Federal Budget Deficit' have been *DECREASING*. It's kinda odd, no?
Too late, we are in a recession. We can now call it, STAGFLATION.
2.25%-2.5% is still very low. In 1990, you would be glad to get a loan at 10% for a house and even higher for a car.
Hiking rates into a recession:
How to completely crash an exonomy 101.
Using those 1/2 to 3/4 point increases to slow inflation are about as effective as putting a copper penny on a train track to slow down the train.
That only results in the penny becoming a smashed flat slug.
At least for now us seniors can now earn 2 to 3 per-cent on our safe money
This and few more of these miniscule interest rate hikes might accomplish that.
.75% interest rate hikes are hitting the brakes pretty hard, by historical norms.
This is the fastest rate of interest rate hikes in the USA in about 40 years.
They have been rolling out a series of hikes, and ramped them up from .5% to .75% this time and the last.
Europe is hiking rates too.
The other big lever is the money supply. The Fed is now withdrawing about $100 billion per month (1/3 Market Based Securities, 2/3 Treasuries). They are reversing the quantitative easing policy of recent years, with quantitative tightening.
By historical norms, we are in an exceptional period of monetary tightening, and it is in particularly sharp contrast to the exceptional period of loosening that preceded it.
It is likely going to hurt, and we have likely not seen the full effects yet of what has already been done. Home sales seem to be showing a slowdown, as an early indicator, but employment is masked by the fact that we are still rebounding from the unusual COVID lows.
Technically, we are now in recession (two quarters of negative GDP growth), but the drops have been small so far (1% to 1.5%).
We will probably see more recession this year and next - reducing demand, energy consumption, inflation and corporate earnings/stock market performance.
Going to need at least 3-5% more to slow things down.
It’ll ease because the economy is slowing down and sagging. As demand is diminished, supply becomes plentiful. Sails don’t inflate when the wind’s not blowing.
Fail gonna fail