Thread
The IMF will get mad, currencies will break, growth fund investors will write their letters, crypto people will complain, but it doesn't matter.
The Fed is going to tighten until they break the Treasury market or something adjacent to it, or get higher unemployment.
The Fed is going to tighten until they break the Treasury market or something adjacent to it, or get higher unemployment.
If the Fed doesn't tighten, people will complain. If the Fed tightens, different people will complain.
Their mandate and their models points them to tighten until either inflation is low, unemployment is high, or the Treasury market breaks beforehand.
Their mandate and their models points them to tighten until either inflation is low, unemployment is high, or the Treasury market breaks beforehand.
Reining in demand through monetary tightness doesn't fix the energy supply issues. If anything, it could make them worse (higher cost of capital, and somewhat suppressed pricing).
Doesn't matter though, that is not in their models. Tightening anyway. ;)
Doesn't matter though, that is not in their models. Tightening anyway. ;)
The beatings will continue until energy supply is structurally improved.
If they suppress demand, the beating takes the form of recession. If they let demand rip (either by choice or if they have to support the sovereign bonds), then the beating takes the form of more inflation.
If they suppress demand, the beating takes the form of recession. If they let demand rip (either by choice or if they have to support the sovereign bonds), then the beating takes the form of more inflation.
Structural, disinflationary growth on a global basis will be able to occur again, once there is abundant affordable energy again.
And that is a long and complex road.
And that is a long and complex road.