Last week’s big news came on Friday. In short, the Fed didn’t ‘pivot’. Not yet. And bringing our conclusion right up front: the pain has only just begun. It’s later — when inflation-adjusted interest rates are higher than the CPI (consumer price index) — that we’ll find out what a twirl the Fed can do.
The Fed lent money at such low rates that Wall Street firms were able to turn single family homes into an asset class. The builder made money. The realtor made money. The mortgage lender made money. And now a whole new intermediary was in the picture — making even more money off the middle class.
Thanks to the Fed’s ultra-low interest rates and its ‘money printing’, our economy is burdened by US$90 trillion in debt. And Mr Biden has just shown us all how to get rid of it.
The Fed and other central banks have plans for a central bank digital currency (CBDC). It’s basically fiat currency in a digital blockchain but complete with tracking and controls to ensure you can participate only if you fully submit to them. It’s a digital dog-leash.
The war news changes daily, and our purpose isn’t to give a dense chronology of causes, events, our purpose is to consider the economic consequences of the war, regardless of military success or failure by one side or the other.
The generally accepted view of inflation is probably mostly correct: Add more ‘money’ and prices will rise. There’s a lot more to the story, of course, but if you get too deep into the details, you’re likely to miss the main point.
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