The Fed WILL Reverse Course By The End Of Q3
All the attention is on inflation. Fed Chair Powell was in front of Congress this week explaining what the Fed is going to do to bring it under control.
In this video I discuss how the Fed's sole focus is on the Phillip's Curve, a model that is long shown to be inaccurate. For that reason, we are not going to see a soft landing. The challenge is the Fed, in an effort to curb inflation, is risking an increase in deflauts. This is going to really stymie the economy.
Hence, by the Sept meeting, my forecast is the Fed is reversing course with their hawkish stance.
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BEER.first time I read about that term of Phillip Curve I will try this weekend to read and learn more about the subject. But we do know inflation well and the truth is that it is detrimental to us, the final consumer, since it contracts the economy.
The system is way too complex but I also think the rates will go down. It just doesn't make sense because there are only so many dollars out there and they are only created when loans are made.
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Short Summary:
Taskmaster 4450 discusses his prediction that the Federal Reserve will reverse course by the end of the third quarter, potentially announcing more quantitative easing or pausing rate increases. He highlights signs of economic deterioration, including increasing default risks and deflationary forces, and criticizes the Fed for focusing solely on inflation. Taskmaster 4450 emphasizes the complex interconnectivity of the financial system and warns of potential consequences if the Fed does not adjust its stance.
Detailed Article:
In this video, Taskmaster 4450 provides a forecast, predicting that the Federal Reserve will change its stance by the end of the third quarter. He suggests that the Fed may announce more quantitative easing or pause rate increases. Taskmaster 4450 believes that the Fed is currently ignoring various market indicators signaling economic instability, such as debt markets, credit markets, euro dollar futures market, and Treasury market.
He expresses concern that the Fed's insistence on a soft landing approach is unrealistic and could potentially lead to a crash in the economy. Taskmaster 4450 points out early indicators of economic troubles, such as dropping shipping rates and increasing inventories in various sectors.
Moreover, Taskmaster 4450 discusses the possibility of rising unemployment rates, persistent inflation, and escalating default risks due to the tightening access to money in the current economic conditions. He argues that focusing solely on inflation, as many are currently doing, overlooks the deflationary impact that defaults can have on the economy. Taskmaster 4450 stresses that the Fed's reliance on the Phillips Curve as a predictive model is flawed and warns about the high complexity and interconnectivity of the financial system.
He suggests that as economic conditions worsen, the Fed may have to shift its strategy to avoid a hard recession. Taskmaster 4450 highlights the importance of considering the risk-reward dynamics in the financial markets, especially as treasuries become more appealing compared to riskier assets like junk bonds.
In conclusion, Taskmaster 4450 emphasizes the need for the Fed to pay attention to a broader range of economic indicators beyond just inflation and unemployment. He plans to continue monitoring the situation over the next quarter and anticipates providing further insights into potential future strategies by the Fed. Taskmaster 4450 believes that understanding the interconnected nature of financial markets is crucial for making informed decisions to prevent economic downturns.