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re: Powell: Fed can maintain higher rates for "as long as needed"
Posted on 4/17/24 at 10:45 am to ned nederlander
Posted on 4/17/24 at 10:45 am to ned nederlander
quote:
Could the Fed have landed in a no man’s land sweet spot where rates are high enough to contribute to inflation by raising borrowing costs, but not high enough to really suppress consumption.
That's exactly what happened in the late 70s and what is referred to as "stagflation".
Enter Paul Volcker who proceeded to raise rates through the roof, causing a recession - much to the consternation of Ronald Reagan.
No president wants the fed to raise their lending rate on his watch, even if it's better overall for the economy.
1
Posted on 4/17/24 at 11:25 am to WildTchoupitoulas
quote:
Enter Paul Volcker who proceeded to raise rates through the roof, causing a recession
It's like taking medicine with side effects
It's likely going to take some level of recession to get us out of this. My suspicion is as you mentioned politicians can't stomach that so they likely keep trying to kick the can down the road as they are now prolonging and perhaps worsening the damage. The might allow a mild recession but that's about it
This post was edited on 4/17/24 at 11:26 am
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