The Unthinkable Just Surged to 2009 Levels, A Financial Crisis Is Inevitable Now

Over the past two years, Fed officials aggressively raised interest rates in an attempt to curb inflation, implementing the swiftest rate hikes seen in decades. Their objective was to moderate demand just enough to lower inflation without triggering widespread layoffs by companies. Despite this strategy's careful balancing act, most forecasters, including many within the central bank itself, doubted its feasibility. They feared that once consumers and businesses started to scale back their spending, a recession would become almost inevitable.

Presently, the Fed believes it has successfully navigated this challenge. However, underlying data casts doubt on this assertion. For instance, many companies took advantage of the ultralow interest rates in 2020 and 2021 to refinance their debt. Only when they need to refinance again will they feel the impact of higher borrowing costs. Similarly, numerous households were able to absorb the impact of rising rates because they had accumulated savings or paid off debts.

A Financial Crisis Is Inevitable Now.


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