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So we are a little over a year into this aggressive monetary tightening policy and we are seeing banks begin to appear to fail with base money demand issues lik
by nemo44x 4y ago
So we are a little over a year into this aggressive monetary tightening policy and we are seeing banks begin to appear to fail with base money demand issues like this SVB crisis.
This happened in 1930 a year after the crash started and again in 2009 a year after the events of 2008.
Fed policy will be interesting in the near term. I know they are fighting inflation but they may have to concede this is a battle that will be fought over the next several years and that deliberately destroying the economy through too aggressive rate increases is bad medicine.
- asimpletune 4y agoI think the problem is that inflation is bad for everyone, whereas if rates rise it hurts only the weakest players in the financial system. It's a bit like a controlled forrest burn. Still though, it's too early to say. If there was a more widespread contagion and a panic, then I guess it could be bad. To me though the real culprit is the super lower interest rates we had just a few years ago. Without that, we would not be seeing any of this.