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Alasdair Macleod, Rafi Farber: Will the Fed Break the Markets?

November 30, 2022

The Federal Reserve has been hiking interest rates at an unprecedented clip throughout the year in an effort to bring inflation back under control. Yet is hasn't been a smooth path, with pressure building in the foreign markets, while the stock, bond, and real estate markets at home have been sinking as well.

This has led many to wonder if the Fed will be able to keep hiking rates without causing a 2008-like meltdown of the markets. And in today's call, Alasdair Macleod and Rafi Farber talk about whether the Fed will ultimately be able to pull it off.

While the Fed suggests that it still has the situation under control, Alasdair points out the problems that it has started to, and will continue to run in to. Because with so much of the GDP and economic activity based on the Fed's decade of easy money policy, that's now being withdrawn, the pressure to eventually revert back to issuing more credit will be greater than ever.

Additionally, as the Fed raises interest rates, they're experiencing losses on their bond portfolio. And Rafi talks about these losses, whether they will be reversed, and how he sees this ultimately unfolding.

So to better understand the dilemma the Fed is facing, and whether it really has a viable long-term strategy, click to watch this video now!

Arcadia Economics

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Minting of gold in the U.S. stopped in 1933, during the Great Depression.
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