People knew there were dotcom stock bubbles (dotcom bubble) and real estate bubbles (GFC). People knew during the gas crisis that the supply shock sent inflatio

People knew there were dotcom stock bubbles (dotcom bubble) and real estate bubbles (GFC). People knew during the gas crisis that the supply shock sent inflation skyrocketing (70s). People knew that wildcat banking would cause insolvency and runs (tons of recessions and panics in the 19th century), people knew that unrestricted lending would cause the mother of all long squeezes (Great Depression). In this case people knew that overly dovish monetary and fiscal policy would overstimulate demand. That leads to inflation, and the Fed’s job is to balance inflation with employment, and since the unemployment rates they look at very low, that means it’s time for them to raise rates to curb inflation by reducing aggregate demand. This has a knock-on effect of cooling asset prices since credit becomes more expensive and harder to get, so the market deleverages. One difference is that expectations are set but interest rates/the money “printed” due to overly dovish policy are still in the process of being changed. So stocks are sold off and people are planning for a recession, but layoffs and the actual economic cooling haven’t happened yet. It’s entirely possible that the fed is able to cool inflation easily (it could also resolve itself if Russia stops fighting or China stops trying to do zero-COVID) without that much of a recession, but raising rates lowers demand, so since rates may go much higher than they are, a recession is likely. In terms of assets, rising rates and subsequent recession involving lowered rates are already priced in