Catch 22: Inflation or Recession?

Today's episode addresses the question 'Do we continue to let inflation run roughshod over our purchasing power, or do we raise interest rates and risk plunging our country into a recession?'

David states that Federal Reserve Chair Jerome Powell is fast approaching a grim crossroad in which he may have to raise interest rates in order to rein in out-of-control inflation.

David explains how Venezuela recently had inflation approaching 40%, and its government decided to raise interest rates to 42% – and he feels that, soon, Jerome Powell may have to decide whether to take similar action.

In other words, Powell seems to be destined to push the U.S. economy into a recession in order to rein in inflation.

David cites Bloomberg Economics' chief U.S. economist Anna Wang, who put the chance of recession in 2022 at 1 in 4, while a year from now it will go up all the way to 3 and 4.

She sees a downturn this year as an unlikely event and says that a recession in 2023 will be tough to avoid.

 

 

Mentioned in this episode:

David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

PowerOfZero.com (free video series)

@mcknightandco on Twitter 

@davidcmcknight on Instagram

David McKnight on YouTube