The fed has a major problem. It must let rates rise to meet some termination point, which means above the rate of inflation. But in so doing, it creates the conditions that lead to a genuine decline in the supply of money itself, which creates serious upheaval of an unpredictable sort. There is no winner in this game.
Keep in mind that this is happening even as price inflation is still intolerably high, with the Fed’s favorite measure (the Personal Consumption Expenditures index) hitting records for the year. That was not supposed to happen. This is called stagflation.
It strikes me as impossible that we can avoid a serious recession with such monetary shocks going on. To be sure, we’ve never seen anything like this in the postwar period—either the pumping in or the sucking out of money—so this could be wrong. We’ll see. But generally, starving the economy of that on which it has come to rely will topple lots of illusions.
Related: “Commercial real estate is melting down fast. Home values next,” the Tesla and SpaceX chief tweeted on Monday.
The HARD leftist Fed is intentionally destroying the SUPPLY side of the economic equation. The ONLY end point of that tactic is a deep, prolonged recession – come depression.
Summary: Ron Paul and all his intellectual influences, (Ludwig Von Mises, Murray Rothbard, et al.), were right all along. Government scrip, (i.e. “money”), is inherently inflationary and follows a road to economic destruction.
PS: most of us here knew that already, didn’t we?
Oh but it did happen before.
In 1976 the “fractional reserve” system was adjusted.
For the next 3 years the money supply exploded. They then fought what the called “ inflation”. Which was a lie but was rather devaluation of the currency.
Funny money.
To fight inflation they did what they are and will do now.
Contract the supply with high interest rates and stop lending.
Lots of dislocation and bankruptcy follows.
Just imagine if we were told tomorrow that a “foot” would no longer be 12 inches but 9!
https://www.bankrate.com/banking/federal-reserve/fomc-meeting-recap-june-2020/
I’m thinking however many inches they say are in a foot, my feet won’t fit in smaller shoes than size 12EEE.
the speed of light is gold. always the same , all currencies hang off of it now in ever diminishing ratios
remarkably there was no real inflation under trump despite massive deficits and money printing. It started literally the day Biden took office and shut choked of oil supply/exploration. Reverse energy policy would be a great start. Agree with above that this is supply side driven versus demand side.
I thought for a long time that the RRSP savings prudent people set aside for their future well being would be much to attractive a target for money hungry governments to ignore. I did underestimate the number of creative ways they could find to steal it..Should have blew it.
RRSPs are great if you think that you will be paying lower tax rates when you retire, but most people won’t be… because generally as you get older and more experienced you end up making more and more money
Tully
2023….if this decade is the ‘ new’roaring ’20s, 2.0!!
makes me wonder how the ‘dirty 30’s’ will pan out?
The solution is to permanently ban central banks, and make them illegal for all of time.
Legalizing counterfeiting by any private group (and it wouldn’t be better if it was public) creates ALL of the problems. And ALL central banks are just that – with deceptive names to make them appear public.
There is no other lasting solution to the problems these POS’s created in the first place.
There is a solution, but we won’t like it. The move to penalize those with the best credit ratings when they apply for mortgages was just the preamble.
“There is no winner in this game.”
The article is wrong on this point. Reality is the winner. Along with people and businesses that are responsibly trying to plan for the future. Stripping away lies and illusions is a good thing.