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Caveat: not an expert. Well, demand is high and supply is constrained. This has caused a spike in inflation. It’s a good question whether interest rates should

Caveat: not an expert. Well, demand is high and supply is constrained. This has caused a spike in inflation. It’s a good question whether interest rates should be used to counter this. In order to counter this interest rates are going up, this reduces the attractiveness of the stock market causing a crash- as you’ve seen in the main indices. But on top of that inflation is high in energy and Putins war is going to spike food prices. High interest rates also encourage people to save instead of spend which will put a headwind on spending. So we’re moving into a situation where consumers are going to be spending a lot of their income on mortgages, rent, fuel and food. Whilst the supply chain may ease supply, discretionary spending looks likely to tank.

hardtke 4y ago
Economists like to say "the cure for high prices is high prices." High prices should reduce demand and also increase supply. I don't see how this necessarily leads to a recession (a contraction in the economy) which is usually caused by fewer people working. We have record low unemployment. A lot of people are just parroting political talking points at this point about the inevitability of a recession, there is no indication yet of one AFAIK.
- tyrfing 4y ago
  The Fed is going to raise rates until something breaks, and a recession or "hard landing" is just the likely cost to be paid. It's a healthy part of the business cycle, and closer to an intentional policy outcome than something that is just happening out of nowhere. The excesses of the past decade are exemplified by the tech industry and it will likely be disproportionately impacted.