RetireBy90
Thinks s/he gets paid by the post
So I've been thinking about the current economy and inflation.
Several problems have been involved to bring us to where we are today and where the economy will go from here. We have all the financial responses to Covid which have increased the money floating around (used to be M2); we have supply chain problems which include current closures in Asia; we have the war in Ukraine; we have a worker shortage; we have inflation and Fed raising rates and reducing it's bond holdings to fight inflation.
So what happens if the Fed tightens to address inflation but the underlying issues are still there ? I can't see how the Covid in Asia, the war, supply line problems, or worker shortages being resolved soon.
1) Does this make the Fed efforts ineffective ?
2) Does this make a recession more likely or cause the Fed to raise rates higher for inflation to fall ?
I'm curious what the body here thinks will come from this. How will the lingering problems affect the Fed's efforts and where this will leave the economy and inflation. I don't see the Fed backing off from fighting inflation after all the investment of influence and reputation. To pause and restart would not be a good response.
Where does this leave the economy and inflation ? This is purely a academic question to me. While economic conditions will affect investments I have no plan to change my investments but to stick to my AA and funds.
Thanks
Several problems have been involved to bring us to where we are today and where the economy will go from here. We have all the financial responses to Covid which have increased the money floating around (used to be M2); we have supply chain problems which include current closures in Asia; we have the war in Ukraine; we have a worker shortage; we have inflation and Fed raising rates and reducing it's bond holdings to fight inflation.
So what happens if the Fed tightens to address inflation but the underlying issues are still there ? I can't see how the Covid in Asia, the war, supply line problems, or worker shortages being resolved soon.
1) Does this make the Fed efforts ineffective ?
2) Does this make a recession more likely or cause the Fed to raise rates higher for inflation to fall ?
I'm curious what the body here thinks will come from this. How will the lingering problems affect the Fed's efforts and where this will leave the economy and inflation. I don't see the Fed backing off from fighting inflation after all the investment of influence and reputation. To pause and restart would not be a good response.
Where does this leave the economy and inflation ? This is purely a academic question to me. While economic conditions will affect investments I have no plan to change my investments but to stick to my AA and funds.
Thanks