I get that the Fed has to raise the Fed funds target rate along with the discount rate to combat out of control inflation but doing it now when the GDP is negative could result in a mess of other problems including a recession. As company and consumer costs rise, less borrowing will occur and GDP should decline even more. Shifting to tight money should have happened well before the past couple months. I guess they have no choice now but the timing is unfortunate.
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Keeping out of a recession, or encouraging employment etc. should be subordinate goals of the federal reserve. The main goal is to be a fourth arm of government and check and balance to keep the money supply stable. Encouraging money multiplication to avoid the paradox of thrift during recessions is a nice to have but not a need to have. Obviously the institution has completely been subverted and gone off the rails with money printing, so we will see if they can have a road to Damascus moment and raise rates properly this time.
From the Fed's website:
the risk of a recession is way more favorable to a period of prolonged inflation or even hyperinflation. the fed, imo, is making up for lost time and 14 years of easy money. gonna be one helluva hangover methinks
At the moment, both stocks and bonds are taking quite a hit but may be this creates buying opportunities. It may not have happened yet, but I have to think that real estate prices are going to tumble because mortgage rates rates have been going up a lot.
could be! it's times like this I'm glad to no have an ARM, to live below my means, and have a decently strong stomach for volatility. I think we'll be alright long term but have no clue if this will be like 1947 where it's over fast or stagflation 2.0 lasting over a decade
doesn't look like reply function worked but I was replying to you financeabc
The Federal Reserve is run by total morons. They and Congress allowed inflation to spiral out of control the same as in the 1970s. And in a similar way, they waited too long to raise rates and are necessarily leading us into recession to get prices stabilized. Thankfully, it will probably be a pretty mild recession with oddly good employment numbers.
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