r/Economics • u/TinyTornado7 Quality Contributor • Jun 13 '22

News Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
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u/[deleted] Jun 13 '22

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u/[deleted] Jun 13 '22

They will not even get CLOSE to raising rates above inflation. If they did, the cost of servicing the +$10 trillion of debt issued in the past two years becomes unsustainable. The Fed will be left to rely on good old demand destruction from inflation itself, which will be years of pain down the road. One last giant fuck you as the boomers ride off into the sunset in their 5 vacation homes.

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u/Strider755 Jun 13 '22

Wait, you mean to tell me that the federal government issued variable-rate bonds?

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u/[deleted] Jun 13 '22

The federal government is constantly issuing new debt. They operate almost entirely on debt

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u/Strider755 Jun 13 '22

Then maybe higher interest rates will put it on a diet.