{"id":62588,"date":"2022-05-06T10:26:17","date_gmt":"2022-05-06T15:26:17","guid":{"rendered":"https:\/\/olduvai.ca\/?p=62588"},"modified":"2022-05-06T10:26:17","modified_gmt":"2022-05-06T15:26:17","slug":"buckle-up-for-a-crashing-economy-and-more-inflation","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=62588","title":{"rendered":"Buckle Up for a Crashing Economy and More Inflation"},"content":{"rendered":"

Buckle Up for a Crashing Economy and More Inflation<\/a><\/h3>\n
\"\"<\/a><\/div>\n

Jerome Powell began hinting that inflation might be a problem last August. In November,\u00a0Powell retired the word \u201ctransitory.<\/a>\u201d But here we are in May and the Federal Reserve still hasn\u2019t done anything substantive to address the\u00a0inflation problem<\/a>.<\/p>\n

And now it may be too late. It\u2019s probably time to buckle up for more inflation \u2013 and perhaps a crashing economy.<\/span><\/p>\n

Powell and Company have been talking tough for months, but there hasn\u2019t been a whole lot of action. In March, the central bank raised interest rates a paltry 25 basis points. At the May meeting, the FOMC followed up with\u00a0a more aggressive 1\/2% rate hike<\/a>\u00a0but took a 75 basis point rate hike off the table.<\/p>\n

Meanwhile, the Fed didn\u2019t even start tapering\u00a0quantitative easing<\/a>\u00a0until January. In mid-April,\u00a0the balance sheet was still expanding<\/a>, hitting an all-time high of $8.97 trillion.<\/p>\n

At the May FOMC meeting, the Fed unveiled its balance sheet reduction scheme. It was hardly impressive. If the Fed shrinks its balance sheet at the proposed rate, it will be back to pre-pandemic levels in about eight years.<\/p>\n

The Fed has targeted a 2.5% interest rate by the end of the year. With\u00a0GDP already going negative in Q1<\/a>, it\u2019s questionable that the Fed can get there without completely tanking the economy. There are already signs that\u00a0the Fed has pricked the housing bubble<\/a>.<\/p>\n

And as Mises Institute senior editor Ryan McMaken pointed out in\u00a0a recent article<\/a>, the Fed really needs to push rates much higher than 3%.<\/p>\n

One percent may seem high to some market observers of recent rate cycles, but we\u2019re now in a high-inflation environment with price inflation above 8 percent. The Fed is going to have to do more than a mild hike here and there to make a dent in 8 percent CPI (Consumer Price Index) inflation…<\/p><\/blockquote>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

Buckle Up for a Crashing Economy and More Inflation Jerome Powell began hinting that inflation might be a problem last August. In November,\u00a0Powell retired the word \u201ctransitory.\u201d But here we are in May and the Federal Reserve still hasn\u2019t done anything substantive to address the\u00a0inflation problem. And now it may be too late. It\u2019s probably […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,173,32872,534,13351,18779,3650],"class_list":["post-62588","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-crash","tag-micheal-maharrey","tag-monetary-policy","tag-price-inflation","tag-schiffgold","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/62588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=62588"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/62588\/revisions"}],"predecessor-version":[{"id":62589,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/62588\/revisions\/62589"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=62588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=62588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=62588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}