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Only 18 months too late! Wheee! Thanks, Fed. Maybe inflation will be under control by 2030.
Actually, the underlying economy is pretty weak. Serious tightening with rising rates should put the brakes on inflation shortly, unless we are already into a wage inflation spiral. But then you have all the future giveaways like student loan debt forgiveness, & etc. Inflation may be here to stay for a while as the national debt continues to soar.
Only 18 months too late! Wheee! Thanks, Fed. Maybe inflation will be under control by 2030.
Actually, the underlying economy is pretty weak. Serious tightening with rising rates should put the brakes on inflation shortly, unless we are already into a wage inflation spiral. But then you have all the future giveaways like student loan debt forgiveness, & etc. Inflation may be here to stay for a while as the national debt continues to soar.
18 months? I'd say more like 6 years too late. We've bounced from bubble to crash too many times with the Fed and policymakers trying to limit as much pain for the loudest people and has consistently too slow to ween the economy off the artificial assist. What's worse is that the Trump administration seemed more focused on boosting the stock market and overheated and already propped up market. I'm not sure if Bill Clinton did the same or if he was hellbent on a roaring economy, but it left the next administration with very little room to navigate (in my opinion).
I thought our government deficit was actually slowing (I think ending the war in Afghanistan might have a part in this), unless you mean the public's debt which is growing as the savings rate has declined(blame YOLO mentality and lack of personal finance education):
As for student loan forgiveness, the blanket idea is insane...but so was bailing out the banks, airlines, automakers, cash-for-clunkers, the Trump (Paul Ryan) tax reform, etc. What I can get behind is a way to make people who got scammed by for-profit education and were left with either no degree or no job prospects, but those funds should come out of the for-profit institution (yes, I'm talking claw-backs). I can also get behind student loan refinancing for the general population but I would require the CFPB and Dept of Education to force all institutions of education that charges the student to post their 3-year moving average of their completion rate, post-graduate unemployment rate, and real post-graduate average income 2 years and 10 years out (not just the self-reported). This will give greater transparency to the student and hold these institutions accountable.
They will go right back to neverending QE as soon as the markets begin to convulse due to lack of monetary methadone.
Now now now, you don't want the stonk investors mad at you. The market is supposed to go up 20% per year forever, and if it takes unlimited QE to make that happen, so be it.
To answer the question, bond yields are suppressed by artificial demand created by central bank bond purchases. Stop buying bonds, and unload the ones they already have, and we are looking at bond yields at levels not seen since before QE started, so pre-2008 bond yields. Now you have to find buyers in the private market alone, which is more difficult.
This will further reduce demand for stocks, and valuations will get down at levels we saw back when the interest rates were at the level in question, so possibly a massive amount of possible downside yet to come. Don't go into bond funds now... as their yields rise their prices fall... wait until bond yields are super high, and then rotate into them.
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