The Federal Reserve said recently that it is raising interest rates by a half-percentage point to get a handle on the worst inflation America has seen in 40 years. It’s the first time in 22 years that the central bank has hiked rates this much. The decision was unanimous, with all 12 members of the policy-setting Federal Open Market Committee agreeing on it.
The Fed’s target range for the federal funds rate is now between 0.75% and 1.0%. The effective federal funds (EFFR) rate, which reflects actual trading in the federal funds market, is normally close to the midpoint of the target range. With the Fed’s new target range, the EFFR will be somewhere near 0.87% going forward.
But CPI inflation is now 8.54%, and the “real” EFFR is now a negative 7.67%, which represents the amount by which the Fed has fallen behind, and it’s unprecedented. OK, lots of stuff is “unprecedented” in our crazy times, but this sticks out, and it means that the Fed continues to pour fuel on the raging inflation fire, which makes it the “Most Reckless Fed Ever.” See this in the chart below and learn more here.
Larry Kudlow who was in the Trump administration and is now a Fox business contributor gave his take on current Fed policy. His take is that the “Fed will prolong the inflation crisis for many years as long as this [Fed policy] happens. See his comments in the video below. Unfortunately, his comments are spot on and probably will not be heeded.
We keep hearing economic commentary like, “worst inflation in 40 years.” And now “most reckless Fed ever.” This should cause you to stop and take a look at the world around you. We keep hearing talk of the “Great Reset.” It is not just lines on a chart in some financial markets you don’t even understand. But, it will get personal very soon, if not already.
As inflation begins to wreak its havoc in many people’s life (especially the bottom 80% of economic classes), prepare to lose 20 to 50% in your standard of living in the next several years. The will be your own personal “Great Reset.”
See more Chart of the Day posts.
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