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Contagion: Chain Reactions and the CoCo Powder Keg

Many Happy Returns

CHAPTER

The Banking Crisis Is Going to Tighten Financial Conditions

I still think inflation is a much bigger problem than the financial crisis that we're seeing right now. Because the banking crisis could get so severe that they have no choice but to cut rates and just cross their fingers on inflation. But they can't do that. I think one of the outcomes of this is that banks will be more careful with their lending. That's going to tighten financial conditions and it'll actually do what the Fed's been trying to do all along, which is slow down the economy and ultimately reduce demand and inflation.

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