Directly meaning the risk of financial failures rises more and more from here with rate hikes. Financial failures in some ways necessitate bailouts or monetary intervention which is worse for inflation. That is what is called stagflation creating both inflation and a recession.
We are at a point where rate hikes in the western world need to stop. I get each rate hike in each country will get different analysis and when all of the hikes stop wont be right this minute but we can get into a bigger mess from here.
What would Larry Summer’s say? He wants to be early to the party. Would he say that?
I [Stephanie Kelton, economist at UNY Stony Brook, author of The Deficit Myth] joined Bloomberg TV to discuss the report at 4:00 pm ET. I saw a number of economists and market analysts referring to it as another “hot” report that could (or should) push the Fed to accelerate the pace of its next rate hike to 50-basis points. And that was after we learned that regulators had shut down SVB. Sheer madness.
During supply side econ from 1981 to 2020 it is an easy misnomer to enter into that monetary policy pushed down inflation. The entire period was disinflationary.
Inflation can be much lower going but that is dependent on our industrial output and economies of scale. Fiscal policy.
The FED with monetary policy has much less to do with inflation. It can not slay inflation. The FED can create a better banking system but at this rate the FED is going to far. We have to wait for the industrialists to straighten all of it out with acts like the IRA starting in 2024 to get fuller traction.
adding
Nix whatever!! We are now witnessing “Operation Twist”.