Rebel Capitalist News Fed Just Made Interest Rate Announcement (What You Need To Know)
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May 8, 2025 Dive into an intriguing analysis of the Federal Reserve's recent interest rate decisions and how they intertwine with unemployment and inflation. Explore the controversial effects of auto tariffs on price stability and market dynamics. The conversation shifts to economic predictions, focusing on the potential repercussions of interest rate cuts amid disinflation trends. Engage with insights on how data is reshaping our understanding of capitalism and the evolving economic landscape.
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Tariffs Cause Temporary Inflation Spike
- Tariffs increase prices initially, but demand contracts and inflation usually recedes afterward.
- Historical recessions show that CPI ends lower than it started despite supply shocks or high inflation starts.
1970s Oil Shock Analogous to Tariffs
- The 1970s inflation spike was heavily driven by oil price shocks, similar to a supply shock like tariffs.
- M2 money supply grew more in the early 1970s than 2020-2024, yet recessions remained disinflationary.
Unemployment-Spike Brings Disinflation
- Every modern recession features an inverse relationship between unemployment spikes and inflation.
- Inflation drops when unemployment spikes during recessions, disinflation always follows recessions historically.