The Big Flip thesis has been gaining traction in the financial world and aptly describes the market’s misplaced belief for the path of inflation and the subsequent path of policy rates.
The chart showing the variance between expected path for the Fed funds rate during October, December and today is fascinating. Quite volatile. Curious to see if/how the path changes based on upcoming data.
Can you make in one of the next issues a detailed analysis of how much more chan the Fed raise rates and how long could they hold them at this level without entering into a debt spiral where the interest expenses would have to be paid by taking on more debt? An analysis taking into account realistic estimates of lower income from taxes and increased spending on social programmes, unemployment benefits, etc. caused by a sustained period of high rates. Also maybe taking into account the effect of increasing dollar strength on their revenues / liabilities.
The chart showing the variance between expected path for the Fed funds rate during October, December and today is fascinating. Quite volatile. Curious to see if/how the path changes based on upcoming data.
Thank you for this issue, excellent as always.
Can you make in one of the next issues a detailed analysis of how much more chan the Fed raise rates and how long could they hold them at this level without entering into a debt spiral where the interest expenses would have to be paid by taking on more debt? An analysis taking into account realistic estimates of lower income from taxes and increased spending on social programmes, unemployment benefits, etc. caused by a sustained period of high rates. Also maybe taking into account the effect of increasing dollar strength on their revenues / liabilities.
That would be very interesting!
Excellent article. Well done!