We'll see what actually happens.
I mean... they printed money when COVID hit to keep the US spending.
If this sell off starts triggering massive buying of off shore stocks due to unease in US stocks... they gotta do something to keep investors in US stocks.
Not to be a doomsayer, but with rising inflation (again) due to tariffs, probable layoffs due to reduced demand on american goods due to tariffs and combine that with high interest to fight the self-induced inflation, people will default, a lot. Even domesctically produced goods will be hit with inflation due to potash tariffs.
I’m seeing in my unqualified crystal ball, a depression happening.
What you are describing is called stagflation and from the massive global experiment that was the 70s oil crisis (cause by OPEC refusing to export oil, so not a bad comparison to now) the BEST way to handle it is thus:
The reserve bank handles the inflation
The government increases the safety nets
And the public get ready to be raped.
The nation's whose central bank and government ignoring inflation to keep people in jobs ended up having inflation accelerate to much, wages went backwards and since they still had no oil, unemployment STILL continued to rise.
So they achieved nothing but wasted money and made things worse.
The nation that ignored everything but inflation also faired poorly, but not as poorly.
The nations who saw that no amount of government money was going to stop a lack of oil from crushing the job market so instead focused on accepting the high unemployment and catching people as they fell did best.
It freed the central banks hand to do the bloody work that needed to be done and made sure the worst of the pain fell on those who still worked.
Now obviously the price hikes and supply issues will be caused by the tarriffs this time, instead of OPEC. But the outcome is the same. The reserve bank MUST follow what it learned in the 70s and if need be publically make it clear that the safety net is government responsibility.
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u/DPMKIV 22h ago
We'll see what actually happens. I mean... they printed money when COVID hit to keep the US spending.
If this sell off starts triggering massive buying of off shore stocks due to unease in US stocks... they gotta do something to keep investors in US stocks.