Today, we’re diving deep into the turbulent waters of inflation, where the risk of a resurgence looms large like a storm on the horizon. It’s a story of economic uncertainty, cautionary tales, and the urgent need for vigilance.
Inflation, that sneaky economic adversary, is stirring once again, casting a shadow of doubt over our financial future. With the Federal Reserve contemplating rate cuts, the risk of inflation rearing its head is very real, reminiscent of the turbulent times of the 1970s when unchecked inflation wreaked havoc on the economy.
But here’s the kicker: personal interest payments now surpass wages for the first time, signaling the precarious balance we find ourselves in. If interest rates remain stagnant or, worse yet, continue to climb, we could find ourselves hurtling towards an economic abyss.
The Fed, with its dovish message signaling a willingness to cut rates, despite the looming threat of inflation. Traders are hedging their bets, with a June rate cut seeming increasingly likely. But let’s not forget the sobering reality: Democrats in Congress are pushing for an inflation target hike, a move that could permanently escalate inflation levels and plunge us into a cycle of economic boom and bust.
The stakes couldn’t be higher, especially considering the person at the helm of monetary policy. Jerome Powell, touted as the “hard money guy,” has overseen a massive money-printing spree totaling a staggering $7 trillion. And with Powell’s potential replacement looming on the horizon, the future remains uncertain.
As we navigate these treacherous economic waters, one thing is abundantly clear: the risk of inflation re-surge is not just a distant threat—it’s a very real and present danger that demands our attention and action.
“Democrats in Congress want the Fed to raise its inflation target to 3% and beyond.”
Not. Going. To. Happen. pic.twitter.com/7rrCQBsIDg
— Douglas Ritz (@douglasritz) March 20, 2024
If the Fed cuts and inflation continues to rebound, it'd be the largest mistake in this century, similar to the 1970s’ when Arthur Burns, former Fed Chair let inflation run, resulting in the worst economic downturn in the US since the Great Depression…t.co/fI5fOBGYx5
— Global Markets Investor (@GlobalMktObserv) March 20, 2024
I will admit, this chart worries me.
Personal interest payments (blue) now exceed wages (red) for the first time – indexed to 2007 –
H/t @SuburbanDrone pic.twitter.com/MHxZt2d4yu
— Samantha LaDuc (@SamanthaLaDuc) March 21, 2024
The Fed dot plot isn't exact science even though they act like it is. They are gonna cut .75 basis points this year just to raise it next year based on dot plot. pic.twitter.com/bQ8aOAXI6k
— Brandon Ogstel (@notwrongearly) March 20, 2024
"The Fed delivered a straightforwardly dovish message: rate cuts are coming even if inflation or growth run stronger than expected:" Citi's Andrew Hollenhorst
Traders are now pricing in an 70% chance of a June Fed rate cut vs a 57% chance priced in on Tuesday.
— Lisa Abramowicz (@lisaabramowicz1) March 21, 2024
Democrats in Congress want the Fed to raise its inflation target to 3% and beyond.
That would permanently ramp up inflation. And it would magnify the boom-bust cycle, the cycle of Wall Street casino followed by jobless crash.
The scariest monetary fact in Washington right now… pic.twitter.com/YUWrzoxkSn
— Peter St Onge, Ph.D. (@profstonge) March 20, 2024