Inflation & The FED's Caution With Rates

ECONOMICS:USCIR   United States Core Inflation Rate YoY
Is the FED's caution on inflation justified? Absolutely! Here is why, secondary inflation spikes are very common when an economy does not enter a recession. The FED knows that. Hence their apprehension moving too fast to lower rates.

I think it is a mistake for people to believe inflation is over, running around with a major hard-on to lower rates. On the other hand, if we enter a recession they will all say "See!! I told ya!" That would be a classic right for the wrong reasons example.

If the FED manages to avoid both, it will be more due to luck rather than skill. BTW that is what is being paraded around at the moment.

Whatever the outcome is the truth the FED is made up of people, and they don't have a crystal ball any more than any of us do. As such their educated guess is still a guess. People have made careers second-guessing the FED's guess which is ridiculous to me. Because more often than not these "self-proclaimed guessing on the guess experts" have been proven to be wrong!

If I had to choose between inflation and recession, hands down I would choose recession. Why? Next to a nuclear war inflation is the most destructive to humanity. Recessions are very normal and child's play by comparison.

We were very lucky last time around with inflation thx to the dollar being strong. Next time we may not be so lucky.

Stay objective, be ready for anything, and stick to dynamic analysis rather than silly models, vague hunches, feelings, and second-guessing the guess!

Caution is in Order!

Real Macro Economic Investing

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