The Fed Raises Rates And Will Collapse The Economy

It’s a risky move, but I have a feeling that the FED will keep on buying bonds an stocks and keep on expanding their balance sheet, just to prove their decisions were correct

This pretty much sums it up...

How many times in its history has the Fed acted wisely?

^{For any answer other than 0, cite evidence.}

if the world economy is facing serious problems and I imagine that this is the way that the Fed has to try to deal with these problems

I expected it to happen a while ago but it looks like the Fed is still going quite slowly when it comes to moving things up. The Fed can't do anything at this point in time except for that.

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Summary:
In this video, the speaker discusses the recent actions taken by the Fed, such as raising interest rates by 75 basis points due to persistent inflation. The speaker argues that the Fed cannot directly address supply chain issues, only demand, and by reducing demand, they aim to balance the supply-demand equation and lower prices. The speaker expresses concern that the current economic slowdown coupled with the Fed's rate hikes could lead to a recession. They also highlight the disconnect between rising prices and stagnant wages, indicating a potential deflationary spiral. Additionally, the speaker points out signals like decreasing commodity prices as indicators of economic instability and predicts further rate hikes by the Fed.

Detailed Analysis:
The speaker starts by addressing the recent actions of the Federal Reserve, specifically the decision to raise interest rates by 75 basis points in response to persistent inflation. They emphasize that this move is driven by external factors like supply chain issues and not solely the doing of the Fed. The speaker argues that raising interest rates cannot solve underlying problems like low oil production or inadequate wheat supplies from Ukraine, as supply issues are beyond the Fed's control.

Furthermore, the speaker delves into the concept of the Fed's role in managing demand rather than supply, aiming to stabilize prices by reducing demand. They warn that the Fed's attempt to slow the economy to address inflation may lead to a potential economic crash, citing historical data indicating limited success in soft landings. The speaker expresses skepticism about Chairman Powell's ability to navigate the current economic challenges effectively.

Moreover, the discussion extends to the imbalance between inflation and wage growth. Despite rising prices, the speaker notes that wages have not increased proportionally, straining household budgets. This disparity between increasing prices and stagnant wages is highlighted as a core issue contributing to economic instability. The speaker predicts potential deflationary consequences, especially in discretionary spending categories, such as electronics and clothing.

Additionally, the speaker raises concerns about the tightening labor market and the Fed's intention to raise the unemployment rate to slow down economic activity. They criticize the Fed for potentially exacerbating the economic slowdown by increasing rates in an already sluggish economy. The speaker offers insights into the global economic landscape, predicting negative growth for the EU and Japan, indicating a broader economic downturn.

In conclusion, the speaker suggests that the Fed's actions may lead to unintended consequences such as deflation, further economic slowdown, and job losses. They highlight key indicators, such as declining commodity prices, as signals of economic fragility. The speaker ends by speculating on the Fed's future actions, hinting at potential additional rate hikes, and encourages viewers to stay informed about economic developments.