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I'm not complaining about 2020, I'm complaining about 2021. I'm not sure whatever it was that led to "transitory inflation narrative", it felt like the Fed was

I'm not complaining about 2020, I'm complaining about 2021. I'm not sure whatever it was that led to "transitory inflation narrative", it felt like the Fed was acting like a third world country, like Turkey's central bank, ignoring basic economical consideration everyone knows. These levels of irrationality caught me and many others off guard. I did not at all expect the central bank to wait an entire year in what seemed like no brainer rate hike. I'm not sure what they were stalling for, but I already lost my trust in fiat then. Inflation isn't going back down until people are sure that central banks aren't going to be weak again. By the way, just look at the markets. They are all calling the Fed's bluff right now. The markets are screaming "the Fed is weak, he'll pivot". Nobody believes the current Fed has the stomach to fight stagflation. Everybody knows he has to, but everyone already saw him chickening out of raising rates for a full year with "transitory inflation" narrative. EDIT: A full year isn't "few months". It's a whole year. A whole year during which the Fed has completely eroded the trust in the central bank. Inflation was already 4.1% at April 2021, continuing to climb, up to 7% in December 2021, yet only in April 2022 the rate hikes started. That's not rounding error. It's a full year during which the problem transformed from somewhat manageable to full blown economic disaster and this train wreck isn't even close to stopping.

ethanbond 3y ago
I don’t think “I would’ve moved rates a few months earlier or later” is a super compelling counter argument. That seems close enough as to be a rounding error in most scenarios, and indeed in this scenario it seems (again, so far) like it’s playing out pretty okay, all things considered. I would be very careful of ascribing a motive or singular opinion to “the market.” It’s way too easy to just project your own theses onto it. Edit: Replying to your edit in an edit of my own... I'm very curious to hear what you think is the "full blown economic disaster" that we're in right now?
- prepend 3y ago
  > "full blown economic disaster" Not OP, but I think to crypto people who got in at the peak, they are in the midst of a full blown economic disaster. Trillions in “value” distorted from garbage coins and exchanges crashing.
- adammarples 3y ago
  The Fed's actions in 2021 were not a rounding error. They poured huge amounts of fuel on an already raging fire. Not just by maintaining zero rates when inflation was out of control, but by continuing to expand their balance sheets aggressively for a long time after it was clear they should have stopped. The effects will take a long time to subside and they will have to go much, much further than they ever would have to reverse it. 2021 was just a footnote though, to the decade plus of ZIRP and QE that they've kept going since 2008. The speculative mania, the bank collapses, etc, are only happening now because nobody in this whole generation believed the Fed would ever even try and do their job, given their track record of kicking the can down the road.
bungeonsBaggins 3y ago
The Fed is not a single guy. Do you think it's a single guy? Are you just parroting something you heard somewhere else without understanding it?

ethanbond 3y ago

I don’t think “I would’ve moved rates a few months earlier or later” is a super compelling counter argument. That seems close enough as to be a rounding error in most scenarios, and indeed in this scenario it seems (again, so far) like it’s playing out pretty okay, all things considered. I would be very careful of ascribing a motive or singular opinion to “the market.” It’s way too easy to just project your own theses onto it. Edit: Replying to your edit in an edit of my own... I'm very curious to hear what you think is the "full blown economic disaster" that we're in right now?

prepend 3y ago
> "full blown economic disaster" Not OP, but I think to crypto people who got in at the peak, they are in the midst of a full blown economic disaster. Trillions in “value” distorted from garbage coins and exchanges crashing.
adammarples 3y ago
The Fed's actions in 2021 were not a rounding error. They poured huge amounts of fuel on an already raging fire. Not just by maintaining zero rates when inflation was out of control, but by continuing to expand their balance sheets aggressively for a long time after it was clear they should have stopped. The effects will take a long time to subside and they will have to go much, much further than they ever would have to reverse it. 2021 was just a footnote though, to the decade plus of ZIRP and QE that they've kept going since 2008. The speculative mania, the bank collapses, etc, are only happening now because nobody in this whole generation believed the Fed would ever even try and do their job, given their track record of kicking the can down the road.

bungeonsBaggins 3y ago

The Fed is not a single guy. Do you think it's a single guy? Are you just parroting something you heard somewhere else without understanding it?