Hot Economy, Rising Inflation: The Fed Has Never Successfully Fixed a Problem Like This

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The reason the Fed “thinks they can thread the needle” is because they cant say that this economy could use a mild recession and increased unemployment. I think that is the real goal – but cant be articulated.

TurtlePaul

>Post-pandemic Economy, Rising Inflation: The Fed Has Never Successfully Fixed a Problem Like This >Pandemic Economy, Rising Deaths: The Fed Has Never Successfully Fixed a Problem Like This >Trump Economy, Rising inequality: The Fed Has Never Successfully Fixed a Problem Like This >China-US trade war Economy, Rising tariffs: The Fed Has Never Successfully Fixed a Problem Like This >Slow Obama Economy, Rising China: The Fed Has Never Successfully Fixed a Problem Like This >Great Recession Economy, Rising bankruptcies: The Fed Has Never Successfully Fixed a Problem Like This >War Economy, Rising terrorism: The Fed Has Never Successfully Fixed a Problem Like This >Bubble Tech Economy, Rising rates: The Fed Has Never Successfully Fixed a Problem Like This >Asian Crisis Economy, Rising GDP and boners of Clinton: The Fed Has Never Successfully Fixed a Problem Like This >USSR Economy, Rising American dominance: The Fed Has Never Successfully Fixed a Problem Like This >Cold war economy, Rising rates, insane inflation, terrorism, Nixon water gate, Vietnam War, gold bubble, hippies not working, energy crisis: >#*The Fed Has NEVER EVER EVER EVERRRRRR!!!!!!!!!#&!$!`(~)$!~)/(!!!!!! Successfully Fixed a Problem Like This* Ok. Cool story.

zxc123zxc123

Well, this is inflation that’s of a different sort because of covid. I’m not sure we can make an apples to apples comparison.

TrashPanda_924

How will rising rates affect our ability to finance the national debt? I’m curious about this but admittedly understand little. But it seems like interest on the debt might become a problem if rates exceed 4% or so. How will we handle this? Will the Treasury just let the debt keep ballooning? Will the Fed have to buy up bonds (essentially printing money)? But that wouldn’t help them control inflation. If the debt reaches some unpayable number, will people just keep buying (they still pay interest on it after all), or could we see bondholders get nervous?

floof_overdrive

The government is praying that inflation will magically disappear. The government created it with the massive M2 spike and then the artificial supply constraints in response to Covid. They are pretending increasing the interest rate from 0.25 to 0.50 will do anything when inflation is above 10% (look up the pre-1990 formula for real inflation numbers). If the government is unwilling to control spending, then getting inflation under control with the interest rate requires a meteoric rise yesterday. This clearly won’t happen because voters will be unhappy and the horizon on the current ruling party is until the next election cycle.

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