Like a drunk not realizing he’s had too many drinks, today the Fed hiked interest rates again and at this point its getting very alarming. Inflation is hurting everyone so I realize raising rates are necessary to stop inflation but I’m concerned at the reckless pace the Fed is going on. Fighting inflation early was a good move, but to keep going after you’ve already regained your grip on it could have disastrous consequences. Interest rates have a delayed effect of around 9 months to a year so a lot of what the Fed has done hasn’t hit the economy yet. Emphasis on yet….

Originally I was a supporter of the feds actions but now they’re completely overdoing it. If you check out the fed funds chart over the past 20 years you’ll see we haven’t been this high in nearly 2 decades and when we were higher…. we had the 2008 financial crisis. Not a good foreshadowing of what’s to come. https://www.macrotrends.net/2015/fed-funds-rate-historical-chart As for how they could’ve avoided this mess, I believe the fed could’ve stopped when they hiked rates to 4% if they held them there long enough. This would still be a high level but it would allow for the fed to see the effects of what they’ve done by pausing. The economy probably would’ve tanked anyway but at least they’d see it coming and could course correct. Instead they’ve continued to barrel higher. But why would one of the most powerful and influential organizations in the world make such a bone headed move?

Despite the claims of being unbiased and unwavered by public opinion, the Fed frequently telegraphs and hints what they’re going to do ahead of time to avoid surprising the public and causing them to panic. The Fed didn’t have to raise rates today, they’ve done enough already. But in order to save face and meet expectations the Fed did it anyway. Hiking rates for political reasons and for public image is a disaster waiting to happen because it means the Fed is making decisions based on emotions about how the public feels about them and not on cold hard logic. As a result we’re headed for a massive recession and by the time the Fed realizes they’ve overdone it they won’t be able to act fast enough.

Despite me pointing out how doomed we are there is one silver lining, inflation will finally be crushed. No more skyrocketing costs of rent, utilities, cars, and everything else. A recession will calm down the demand for all these goods allowing supply to better match demand. It’s just that the Fed is taking a bazooka to kill a squirrel when all they needed was a bb gun. Its overkill and there’s going to be a lot of collateral damage. I wish they’d realize this but it’s a lost cause. What isn’t a lost cause is the readers of this blog. Together we can prepare for this upcoming recession ahead of time so we’re ready when it comes.