>>20166959Well the basic logic is something like this: we're in a repeat of the 1970s. So if the Fed raises interest rates, that trickles into the economy over the next year or two as people borrow less, crimping spending, which crimps inflation. The Fed doesn't want to crimp too much though or that causes a recession.
Here's some parts where we may need to throw that out the window:
>People and businesses are stuffed with cash, so don't need to borrow, therefore dgaf about interest rates.>They were also given years with ZIRP and ample warning about rate hikes. So even those without cash loaded up on long term debt at low rates.>In the 1970s, the national debt was about 30% of GDP. So the Fed hiking rates made the government print a little more to cover higher interest on that debt, but not enough to counter the money that got calmed down in the private sector. Now the debt is 120%. Our $870b in interest payments on $34t in debt amount to about 3% of our $28.8t economy.>The tipping point for various markets (real estate, FX, our beloved TQQQ) may literally be one or two rate hikes away. It could be a nonlinear deal where just not cutting for the rest of the year does as much economic damage as we'd "normally" expect from jacking rates up several percent. 