Posted on 02/22/2022 5:01:53 AM PST by Browns Ultra Fan
As US/Russian tensions grow over Ukraine, The Federal Reserve may be forced to postpone or reduce planned rate increases and balance sheet trimming.
But in addition, we see US GDP slowing to near zero (1.285%) as the US Treasury 10Y-2Y yield curve has flattened to 41.684 BPS. The good news? Bankrate’s 30Y mortgage rate increases have slowed to 4.19%.
On a different note, I noticed the Chicago Bulls logo when turned upside-down looks like a space alien violating a crab. Much like Putin and Russia violating Ukraine.
(Excerpt) Read more at confoundedinterest.net ...
We have a better shot to reBuild Back Better from the ash heap of this globalist mess.
Old leftists with ticking time clocks tend to be the most dangerous. See: Soros.
Way to go, Brandon. You’ve managed to derail this economy in less than a year.
High energy prices are painful to consumers, and in an overheating economy that can be an effective way to slow the overly rapid pace of economic activity. Energy prices and rate hikes work in the same direction to cool the economy. Unpleasant, but warranted. And yes, the overheating was largely caused by the ARPA being too large.
“The Federal Reserve may be forced to postpone or reduce planned rate increases and balance sheet trimming”
I call BS on this. The Fed has become so politicized, it will do nothing to slow down inflation. Increasing energy costs will fuel inflation even more. We are entering stagflation.
Increased energy costs fuels inflation. The costs of goods and services will increase along with wages. Inflation is a regressive tax that hurts the poor the most.
The USG has made things worse by continuing to pump huge amounts of money, mostly printed, into the economy. What happens if we have a recession? More government money.
The thing is, the current situation is the opposite of a recession. It’s a boom. You worry about the recession when it happens - and it probably will - but right now you have to stop the boom.
Yes, consumer pain is painful. It’s better not to use policy to create unsustainable consumption boom. But we cannot undo the past two years. The reality is that the economy needs to be slowed. High energy prices will help to slow it. Higher interest rates will help to slow it. Then, yes, comes the chance of a recession, but with the amount of juice still in the system from past fiscal policy, it might not be such a deep one.
Other data indicate that we are headed into a recession in 2022 regardless of what we do.
There will be pain if the Fed divests itself of some of the $7 trillion it holds in T-bills and increases interest rates. It will hurt Wall Street more than Main Street.
The question is whether the Fed will do what is necessary or cave to the WH. They talk a good game but still have not changed their policies.
There is no way that the Fed will increase rates high enough to actually stop inflation.
Currently, the federal funds rate is less than 0.1%. In the late 70s and early 80s, it took raising the federal funds rate all the way up to 19% to stop inflation. Raising the funds rate even a fraction of that amount would crash the entire U.S. economy, which is now dependent on extremely low interest rates and an endless supply of OPM (other people’s money) flowing out of the federal government. Small rate increases will only give us Jimmy Carter style stagflation, delaying and exacerbating the inevitable crash.
Inflation is only going to get worse until the economy crashes.
https://www.macrotrends.net/2015/fed-funds-rate-historical-chart
This is the very definition of Stagflation.
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