We've had more than a decade for businesses to get used to being able to borrow on short timeframes of ~2 years with extremely low interest rates. Increasing t

We've had more than a decade for businesses to get used to being able to borrow on short timeframes of ~2 years with extremely low interest rates. Increasing those interest rates will cause zombie business interests to go broke by increasing their borrowing costs. This will probably look something like a meltdown in the office and retail commercial MBS for a start (I have no idea who else is out there ready to join the party once it gets started, but that's a good start). Already sales of CMBS have fallen 85% from where they should be this year: https://www.bloomberg.com/news/articles/2023-02-17/sales-of-cmbs-plunge-85-as-commercial-property-markets-freeze https://www.bloomberg.com/news/articles/2023-02-17/sales-of-... Those interest rates also go into everyone's Discounted Cash Flow models, which affects the prices of assets across the board, once people start to adjust to the fact that higher interest rates are going to stick (until the Fed blows up the economy, which of course means the beta value in those models needs to increase). Once the unemployment rate climbs back to 6-8% or higher then the Fed will probably cut interest rates back down to zero again due to the recession that they will have created. With more slack in the labor force then when they do that inflation will not reemerge. The recovery won't be V-shaped like the pandemic recession because businesses will be allowed to go bust without any kind of government support -- the recession may be particularly bad since the Republicans in the House will want to hang the recession on Biden (a situation which didn't happen in the 2001/2008/2020 recessions since there were Republicans in the WH and cooperative Democrats).