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Chris Ferro's avatar

Powell won't cut until unemployment goes up, and even then I'm not so sure. Everybody is PREDICTING that he'll cut, but I'll believe it when I see it. The Phillips Curve says that if unemployment goes up then inflation must come down, but it was debunked back in the 70s and 80s. If unemployment goes up but the government needs to keep expanding the money supply to cover it's reckless spending and debt service payments, then inflation isn't going to come down. So we'll have inflation AND unemployment - which is "stagflation." If Powell cuts rates, inflation will rage even higher and we'll STILL have high unemployment. We're screwed either way, and the only thing that can save us is massive cuts to Federal Spending coupled with economic liberalization (deregulation) to encourage growth. Unfortunately, NOBODY in Washington wants to do any of that, so we'll probably just get a nice juicy World War Three and millions of us will die. Have a nice day!

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Kathy's avatar

Scary stuff. Having been through the 70s and 80s the economic future is bleak.

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