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THE RISE AND FALL OF THE CONSUMER
After experiencing the largest government-financed consumption boost in history, household demand for goods and services is poised to fall off a cliff. The US economy simply cannot handle the Fed’s continued monetary tightening. This is the onset of a vicious stagflationary environment. The unprecedented combination of excessive debt, the bursting of speculative asset bubbles, and the persistence of inflation due to structural supply imbalances makes the current economic and market environment truly precarious. A major contraction in consumer demand is imminent. These factors will soon pressure the Fed into a policy dilemma.
The Fed is facing one of the worst predicaments of its existence as it continues to raise interest rates into an economic downturn. The problem is that sooner rather than later it will be forced to relent and inject liquidity into an already inflationary…
