The Fed, not surprisingly, raised interest rates again in an effort to get a handle on inflation.
Also not surprisingly, the rate hike was too small for what is required. 75 basis points would have made more sense at any time before 2021. A strong economy can handle higher interest rates. The fact that Wall Street wouldn't allow that to take place shows how weak the economy truly was. We could even say that the economy has been on a ventilator since 2009.
Consumer price inflation made its return with a vengeance after that, and there's no sign of it backing down. What is needed are large enough rate hikes to the point where consumer price inflation retreats. I don't see that happening.
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I totally agree with this. I would even say that the crisis was looming even without COVID-19. Now just imagine how much Fed has to raise the rate to curb inflation which is the highest in 40 years.
Whatever the rate of consumer price inflation is, the interest rate needs to be higher than that. That's what it will take to bring consumer price inflation to heel.
The question is how long will it take before interest rates reach that level. We're screwed no matter how long that time is, so we may as well get it over and done with. The Fed, on the other hand, doesn't see it that way, so it will take its time in hiking interest rates thinking it's doing the right thing. But it's not.
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We dont have a strong economy, that is the problem. The Fed is hiking as things are slowing down.
As for the CPI, the Fed has nothing to do with this. Their moves are not going to help with supply chain issues. Instead, they can only affect demand.
We are in the least talked about depression ever. Since 2009, we are trailing long term growth rates (heading into the GFC) by more than $5 trillion in the US alone.
There is no money to keep growth going.
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I thought about referring to consumer price inflation as CPI, but CPI usually refers to Consumer Price Index. I'm referring to inflation itself, but the problem is with the price of consumer goods as opposed to the price of assets (which is essentially the Wall Street domain). So I kept writing "consumer price inflation" instead.
Financial media still talks about "The Great Recession" of 2009. Recession had become the preferred term of choice after the Great Depression of the 1930s, but the words mean almost the same thing.
For the least talked about depression ever, I refer everyone to two articles covering the Depression of 1920-1921:
While technically taking place during the existence of the Fed, the Fed then was still finding its way after just a few years of operation. So essentially this financial depression was allowed to work itself out. It was sharp, and it sucked-- but then it ended as suddenly as it had arrived. Since there was minimal to zero Fed involvement here, this one will rarely if ever get discussed in corporate legacy media.
I seriously doubt the upcoming recession/depression will be that brief. We're freaking doomed.
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