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Why Interest Rates Must Go UP
Last Wednesday, Jerome Powell read his transcript, which goes over the Central Bank's plan with interest rates.
This is what was said:
"Interest rates are rising by 0.5% and will continue to rise until inflation is 2%."
This means that interest rates are for sure going up from here. The only question is how much higher now.
"The labour market is too out of balance. There is too much demand from companies for new employees. Interest rate hikes can't stop until more layoffs occur and there are fewer job openings."
This means the Central Bank is waiting for more people to get fired and companies to shut down before de-accelerating interest rate hikes.
"It is a much greater risk to stop raising interest rates or slow down rate hikes too fast. This would lead to entrenched inflation. I will not loosen the policy and risk entrenched inflation."
He is saying that if the Central Bank slows down interest rate hikes too soon, inflation will be permanent within society, and the USD will die. They can't allow this.
"We are surprised at this high inflation. It is continuing longer and faster than expected."
In the end, he got asked if there was a possibility of a "soft landing" (a non-recession). He said, "if inflation keeps surprising us like it is now, the runway for a soft landing will be much smaller." He is prepping everyone for the harsh reality about to come.
Inflation is not surprising to the Fed; they knew this would happen; it is basic math. When money printing started in 2020, the entire Bitcoin community was trying to spread awareness about how it would inflate the dollar and cause hyperinflation in foreign countries. The Fed purposely ignored the warnings because they knew exactly what they were doing. And now, they need to keep pretending like a great recession isn't about to happen because what's the point of scaring everyone at the same time anyway? They are still trying to extract more money by pumping and dumping stocks, playing with everyone's emotions before the inevitable collapse they caused. The only way forward is to burn down the forest and let new growth appear.
You can watch the Fed speech here.