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Did The Fed Just Back Down? | Joseph Wang & Michael Ippolito

Forward Guidance

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The Effect of Interest Rates on Inflation

If interest rates right now were at zero and the Federal Reserve did no hiking whatsoever, do you think inflation would have been higher or lower? Well, it'd be much, much higher. You'd have column prices up another 50% right? S&P would go to the moon. That's money for a lot of people,. So that definitely happened in 2020, 2021. Do not predict a 5% inflation. 5% inflation is here. It seems to be quite happy having negative real returns.

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