Casualties of War
The Federal Reserve raised interest rates yesterday, explicitly to fight inflation. But it warned that its efforts might not be enough due to the ongoing war in Eastern Europe. And yet, In his first update for Countdown to Crisis, our Jim Rickards explained why people should be suspicious of current upward moves in the major indexes:
Since the Fed has misdiagnosed the disease, they are applying the wrong medicine. Tight money won’t solve a supply shock. Higher prices will continue. But tight money will hurt consumers, increase savings and raise mortgage interest rates, which hurts housing.
The Fed’s track record of using the wrong models, using flawed models and doing the wrong thing at the wrong time remains intact. Today’s Fed announcement is the beginning of a chain of tightening that will sink stock markets and slow the economy.
Ironic, isn’t it, that the Fed’s deflections, misdirections and propaganda are having the desired effect on the media as U.S. policymakers continue to accuse Russia of manipulating the truth?