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JP during his talk "inflation has not reacted much to our existing rate hikes". This analysis from Lyn Alden is really good at explaining why https://www.lynald
by mempko 3y ago
JP during his talk "inflation has not reacted much to our existing rate hikes". This analysis from Lyn Alden is really good at explaining why https://www.lynalden.com/inflation-vs-interest-rates/ https://www.lynalden.com/inflation-vs-interest-rates/
TLDR; The monetary expansion we saw was because of huge government spending during the Pandemic, which boosted growth and jobs. Higher interest rates on government debt just means more money going to the private sector. So Fed's rate rise provided a windfall for those holding government bonds, furthering inflation.
- deleted 3y ago[deleted]
- quickthrowman 3y ago> So Fed's rate rise provided a windfall for those holding government bonds, furthering inflation. Silicon Valley Bank was insolvent because the value of their government bonds declined so much after the Fed started raising rates. They were taken over by the FDIC after this came to light and the bank no longer exists. I find it hard to characterize that as a windfall.