Fed Now Expects Deep Recession Needed to Beat Inflation

Inflation is proving extremely sticky. Which begs the question how high will the Fed have to raise interest rates to finally get control over inflation? Based on two recent findings, it looks like interest rates may have to get a lot higher than previously expected by both the Fed and most market participants. First, we have the latest minutes from the Federal Reserve's last meeting that show they may have to raise rates much higher.

And number two, we have a recent paper released by the Federal Reserve Bank of Cleveland that suggests that it may be accompanied by a deep recession as well. So, let us break this down. What has been happening recently is making the Fed rethink how high they might have to go with interest rates.

Timecodes
0:00 Video Introduction
0:44 Inflation Proves Sticky
1:49 Economic Pain for the Average American Consumer
4:00 The Mechanics of Inflation
5:01 The Lagging Data Problem

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#RateHikes #FederalReserve #Recession

[Pelican]

The FED has only met the 2% benchmark 11 times since 1970. 8 of those came since 2010. 2% is just a smokescreen.

[ramjamflimflam]

If they can get honest and recognize that the rate is far higher that 6 or 7 %.

[millionbillion]

Maybe the Fed should just stop printing money to reduce inflation. 🤷‍♂️

[cosmic]

I remember as a kid in the late 70's early 80's there were so many liquidation warehouses.. Retailers won't lower prices in the stores instead they will give you deep discounts out the back door.. I just scored a new QD-OLED TV for $950 bucks in all the stores it $1799+ tax ..Same with car dealers they won't lower prices on the lot but will take the loss at the auction to other dealers

[mikeike]

I’ve noticed that you are speaking slower, not fast as usual. I thank you for that. It helps me to understand better. Please continue doing so, if you don’t mind. 👍

[bkm]

You’re probably right about what will happen, but the timing is always difficult

[paulpierce]

the deficits make it harder to fight inflation. we can only raise rates so much for so long before the payments on that debt become to much to service. Hence we crossed 120% debt to gdp we are now in a death spiral. Though we are pretty far out but the more debt we get the faster it will go.

[elementsofmassage]

Nothing like writing a paper that says it will be bad, to assure the masses that they knew it all along after it happens. Then you will believe them when they say it's the recession we had to have.

[thomaskauser]

Powell hasn't even got why the yield curve is so inverted and he hasn't even started peeing his pants yet!

[robertgarrett]

I’ve got a feeling that this inflation will keep rising through the end of this year.

[wealthtrekkers]

what about the velocity, where is that metric at these days?

[Alison]

So do you think geopolitical issues could interfere with inflation coming down? Especially if we do end up at war with china, that would drastically affect supply side of the economy, would it not?

[damienthompson]

The difficulty in forming a consensus is the constant barrage of contradictory data. Fed reserve tightening while government launches stimulus package. Interest rates up but still much lower than actual inflation rate. Consumer spending up but confidence down. Employment figures up but more lay offs and more part time work. Savings rate down and spending up. But wages stagnant. Oil markets manipulated by sales of SPR. sales of EVs up but demand for raw materials down.

It's a mess.

[TheGadgetwiz]

Almost everybody I know has been laid off at least once now. We are heading into a deep recession no matter what they do now.

[cbpuzzle]

Yay. But they weren't thinking about thinking of raising rates until 2024. Hmmmm

[crp]

I think you are right on inflation numbers crashing. The fed always is too late on what to do. They are going to over do it on rates and that's not where the real problem is. First off the gov't has to stop over spending. They are the biggest problem driving inflation.

[CKpremium]

Pretty much anyone whose actually competent in the markets and economics knew a recession would be inevitable with how out of control inflation is and how long the fed took to tighten over a year ago.

[Ztv]

I would appreciate seeing a video exploring a contrarian view to your forecast. We have to be willing to consider at topics from multiple angles to form an educated opinion, otherwise we're just jumping on the bandwagon.

[davidkw]

just bring up the rate to 20% in one swoop and crash everything at once.

[skyhook]

The fed is doing a great job 👏 keep up the good work!