The Fed Isn’t Bluffing: The Real Threat of an Upside-Down Depression

The Fed Isn’t Bluffing: The Real Threat of an Upside-Down Depression

From blogs.cfainstitute.org

Will the US Federal Reserve abandon its aggressive contractionary monetary policy once markets begin to capitulate? Many investors hope so. But given the fundamental conditions at play, we would be wise to dispense with such fantasies. The Fed is unlikely to shelve its policy prematurely. That means we should prepare for economic pain more severe than any we have experienced over the past decade. To understand why the Fed is unlikely to back down, we first need to understand the gravity of the threat. A Depression Turned Upside-Down: The United States has experienced periods of high inflation lasting longer than a ... (full story)

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