This isn’t Covid. No unlimited unemployment and federal government checks in the mail. No one is going to be fighting to pay $60k on a rav4.
It’s well known by now Covid inflation was powered by the government giving everyone plenty of money to spend. Inflation while people are broke will just mean things rotting on shelves, or companies cutting profit margins (which is why the market is crashing, no more 30% profit growth every quarter, imagine if companies just….broke even)
The fed has the power to create whatever money they want. They can also purchase equities indefinitely. They can also Purchase government debt. The government then spends the money on whatever. Both activities inject cash into the economy.
They did it for YEARS after the great recession. Thankfully then, baseline inflation was low. Baseline inflation is higher now and tariffs are inflationary.
JPOW talks this afternoon so we may get a hint at what their plan is...
Tariffs probably won’t last forever, hopefully gone this year. But if we can lock into fixed rate loans 1.25% lower, you’d save a lot in the long run.
The only net positive would be if the government can refinance the $7-8 trillion at super low rates and then they immediately drop the tariffs. Of course that means the fed will need to purchase huge amounts of government debt....
Perhaps that is their "grand plan". However, I'm not sure that much thought has went into it....
941
u/superhappykid 1d ago
Nice, enjoy that 1.25% Rate cut when you buy your $1600 iphone.