What most people don’t see is that we are basically under “shadow austerity” to correct for the not so hyperinflation we saw post COVID.

It is a combination of post WW2 Britain (China is the US in that analogy) - this helps to explain the Canada and Greenland issue; and Volcker era stagflation economics. It will not get any better in the short term, but there is likely to be substantial growth in the long term as a result.

What that means is the fed likely won’t reduce rates, and it may reduce its rate decrease to 1 this year, if even that. It is entirely possible the rate doesn’t come down at all.

Expect Layoffs to come, as the fed doesn’t seem to care about unemployment as its target is on inflation. Many zirp era businesses and funds will fail. Less cereal and eggs for the same dollar.

I am really hoping we don’t start to de-anchor from 2% inflation as a result of all this. I wonder how various US infrastructure projects can and will be financed. Reduction in entitlements. Possibly some type of mandate to hold treasuries.