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[quote=Anonymous][quote=Anonymous]Look, the doomsayers believe that the Fed must immediately return inflation to 2%, which will require sufficiently high interest rates to create a recession. But, they’re missing a lot. First, the Fed doesn’t have to return inflation to 2% immediately. More likely, they will balance inflation and economic growth. So, the Fed is more likely to accept 4% inflation for 2023 and 4% unemployment instead of 2% inflation and 10% unemployment. Economics is a SOCIAL science implemented by people, not a physics phenomenon implemented by the vagaries of nature. We can choose our medicine. There are options. Second, the doomsayers don’t allow for any inflation help from China’s supply chain improvements or resolution to Russia’s war. Unlike Russia, China actually makes things and wants their economy to thrive. They don’t want the world to move its manufacturing base from their country. On the war front, the US Treasury is now floating the idea that Russia be allowed to sell oil at discounted rates. Russia already does this for India and China. The idea is to keep Russian oil on the market but deprive them of market rates. Both of these changes would improve inflation, essentially doing part of the Fed’s job for it. In those circumstances, the Fed wouldn’t have to raise rates sky-high, unemployment would stay low, and the stock market would bottom sooner and rise more quickly. Beware of the doomsayers. [/quote]

And “inflation is transitory.”  The Fed had a chance for the “soft landing” and they missed it. History says that when inflation reaches these levels before the aged acts, the result is a recession.

The idea that the supply chain issues and oil prices are going to miraculously resolve themselves and save us is a pipe dream.  Europe isn’t going to go back to being dependent on Russia for energy. In any case, Oil isn’t even the problem now — it’s refinery capacity. [/quote]

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