Here's the thing, the usa would be paying more on interest for its 35 trillion dollar debt than the military budget if they keep rates up high
the fed has said time and time again they will not repeat the mistake of the 1970s when the fed would raise rates then keep them there, hoping that the high rates would cure inflation
this is why they haven't pivoted and have only gotten more hawkish
the us gov cannot afford the high interest payments for a decade like when the rates were high through the 70s and early 80s
also the whole world is addicted to the free money printing credit capitalism that we've had since we got off the gold standard
basically what the fed is doing is ripping the bandaid off fast instead of slow
this is why I'm not believing anything about pivoting until we see the inflation numbers come down rapidly...and if there's one thing that 2008 taught me, inflation gets nuked (it was in the 5s prior to the crash and hit -2 afterwards)
the good news is if the fed is following this model, by 2024 we will be in the "recovery" phase after the capitulation, which means that interest rates will be back to near zero because inflation would've been destroyed
the fed needs 3 things: low core cpi, good pce, and unemployment at 4%. until then, they are going to relentlessly raise rates
I'm afraid what they're actually going to say on nov 2 is that they are sticking to their 125 points by the end of the year target so 75 this time and 50 next, but then they'll say that they aren't going to hold there and that they will continue raising throughout 2023 if need be.
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