, the Fed hikes interest rates up to meet inflation, which in turn slows the economy, causes the unemployment rate to surge, and crashes us into a recession.
The worst case is an economy where interest rates and inflation never meet. It's a limbo of stubbornly high inflation and higher interest rates. The Fed continues to hike rates but never does so in a way that truly tames inflation. Price growth sticks around 4% or 5%, well above the Fed's target. Businesses are stuck with rapidly rising input and labor costs, higher borrowing costs, and major uncertainty about economic growth.
"The idea that tightening a percent or two from here will beat inflation is hardly credible," he said. Einhorn argued that the Fed needed to hike more dramatically — to give the economy a massive hike as Paul Volcker did as chairman in the 1980s. But Einhorn added a worrying wrinkle to this scenario: that the Fed would be stopped in its tracks by what high interest rates would do to the US Treasury.
If Einhorn, Bianchi, and Melosi are right, we could be in economic limbo of stubbornly high inflation and higher interest rates for a while.
Oh yea, they said something similar around mid of March 2020...
GaHouseHub GOP GOPGovs GaRepublicans
Economic nite mare has been here?
Behind paywall...
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Stock Market Today: Dow Closes 100 Points Lower; FedEx Stock Drops Over 20%Stocks ended a haywire week with losses on Friday. The major indexes are now down four of the last five weeks. Sounds like we should invite James Taylor to celebrate this milestone with tune… Trust in stock markets and 401ks is being eroded - saving all the money you earned through work or inheritance under your mattress would have saved many from huge equity and bond losses in the markets - let’s keep being skeptical of the fed I have a better description than haywire 😒
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