Not since the days of former Fed chairman Paul Volcker battling inflation 40 years ago in driving the economy to a two-pronged rise have we not seen anything similar to what the Fed is doing today.
The inflation rate this week, which is expected to be followed by a sharp rise, will be another sign of a free economic recovery as the Fed reduced interest rates to zero in March 2020 to address the economic and social crisis caused by the epidemic. down has come to an end.
Are you worrying about money? Let’s talk about it.
Lower prices, emergency relocations to help deal with the coronavirus crisis in the economy and financial markets as well as the huge increase in covid-drivenin unemployment, were the beginning of a free journey.
Lowering house prices caused house prices to rise because house prices fell by a much lower price by three percent.
The cut helped boost the stock market by showing that corporate profits will rise sharply. In addition, the expected future profits were significantly higher because economists and other economists discounted them at lower prices.
Finally, many investors who try to earn their living were forced to enter the market because of securities, with interest rates, such as market capitalization and short-term Treasury security, fell sharply due to falling Fed prices.
But the free ride bill that most of us now have is coming in a variety of direct and indirect ways.
Mainly due to the increase in Fed currency, interest rates have skyrocketed, slow declines and in some cases lower inflation, which is the main source of income for the American people.
Rising prices have also devastated the stock market as they threaten to reduce corporate income and reduce the current value of profits.
This increase has also hurt the stock market as it not only threatens to reduce corporate earnings but higher interest rates have reduced the current value of expected profits.
In addition, market share yields have been on the rise (up to 1.22 per cent since Thursday, according to Crane Data, up from 0.02 per cent last year), making them even more attractive compared to group yields at the S&P 500 and Total Stock Market index. money. As a result, some funds are moving from the market to interest-bearing assets such as Treasury funds and long-term securities, whose yields have skyrocketed.
In contrast, say, a chemistry class experiment in which you mix different substances in a beaker and you can see the results quickly, it is impossible to test exactly what the Fed is doing.
Despite Fed spending, the unemployment rate dropped by 3.6 percent so far.
However, by banning some form of economic miracle, unemployment seems likely to rise, reducing wages and reducing the need for inflation but causing great pain to people who find themselves unemployed.
Some large technology companies have reduced their lending, and companies such as Tesla, a former employer, have been laying off workers.
What is a recession? Your financial questions have been answered.
Would this be possible if the Fed did not raise prices and tell the public that it is trying to reduce the economy to slow inflation? There is no way to know.
But it is clear that the fear of a recession caused by the Fed affects corporate governance – and that the effects of job losses, overcrowding and small-scale expansion are causing all kinds of suffering up and down the line.
How long will the Fed continue to tighten its grip on inflation? It does not know yet.
But in the midst of the darkness, you can find encouraging – even small – signs that some very low days may be behind us.
The price of petrol, a major contributor to the economy and psychic fears of inflation, began falling last month according to AAA, which tracks gas prices across the country. AAA says Tuesday’s average gas price was $ 4.66 gallons, down from a high of $ 5.00 on June 14th.
This is still about 50 percent from the average price of $ 3.14 a year ago, but it is much better than it actually was. And it has been falling steadily.
And one day, Russia’s vicious attack on Ukraine, which has devastated the global economy of electricity and grain markets – including massacres, the destruction of Ukraine’s economy and the enslavement of millions of Ukrainians – is coming to an end.
Yes, more pain is on the way since the free economic growth from 2020 ends.
But fortunately, by this time next year, our 2022 inflation problem will be a history, not a modern one. And the Fed will stop raising prices.