Amerman analyzes what happened the last time the US was struggling with sustained high inflation; the period from 1968 to 1983 included 16 years of the Fed under the leadership of four different Fed Chairs, experimentally trying different methods for slaying the inflation dragon. There were four recessions and three pivots, and we can track their actual relationships with inflation and interest rates in practice.
The data shows a relationship between inflation, interest rates, recessions and pivots that is different from that being discussed in the financial media. Based on that data, there is a chance that 2023 will work out differently than the markets are expecting.
Up for discussion: How it started; the next stagflationary cycle; failed experiments; enter Volcker; and crushing inflation.
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