Hey. I am not a lunatic. Hear me out.
Look at this meme first.
America released inflation data yesterday which was 8.5 % YOY. This number is soo high that the last time we saw things becoming this expensive was around 1981.
Federal reserve has a alleged power. A power to control inflation and bring prosperity to the economy (Lol ) . But have they screwed up ??
I am saying this because in 1981 with inflation at 8-9% the fed interest rates were at 10 % and by 1984 it had reached to 20 % .!!!!
That's right 20 % of interest rates per year by banks , imagine that, and it very likely to happen again .[I don't clickbait]
But, has the Federal reserve messed up big time ? . The current rates are at 0.25 % , astronomically low, while they have said that they will increase rates from May by 0.5 % and then 0.25 % at every meeting till the inflation is under control. Will it be nearly enough ? I think not, because they had to increase rates from 10% to 20 % to control inflation the last time when it was at 8.5 %.
Rates should've been at 5% already.
Why don't they just increase rates by 5% directly ?
Well, those interest rates actually represent the economy the higher they are the more expensive it is to borrow money and economy slows down or could even go into recession. Their decision of raising rates by just 0.5 % has already triggered a sell off in the stock markets with S & P 500 falling by % 4.5.
That is relatively big sell off, imagine now them increasing rate from 0.25% to directly 5%. That would cause a bigger sell off than 2008.
Are the masses aware enough ?
After reading, you might wonder "Are the masses aware of it pit whole world is stuck in ?" . This is not just US but majority of the big economies. Answer is NO.
In fact, people are so delusional that they took the yesterday's data as positive and pumped all markets thinking that inflation data is not THAT bad.. (Just kill me at this point). They looked at CORE CPI which came at 6.5% instead of 6.6% (That's right. What a relief right ? NO).
What they do not understand is CORE CPI is calculated by excluding FOOD and ENERGY's inflation. Yeah, they exclude they most essential of things which we buy daily and call it "CORE CPI". What a joke.
Just for your perspective Food and Energy are rising at an unprecedented rate of 30 % + .. YES YES . I AM NOT JOKING .
Click here to head over to official website of US bureau of labor statistics to verify yourself.
At the end it baffles me that how can someone look this mess and buy stocks who are so overvalued while confidently believing it'll only go up ? I am starting to think it is me who is taking things too negatively .. Yes Yes that's the problem.
Please wait while go leverage my house, my family, take a personal loan 10x my income and GO ALL in on the stocks because they never fail.. To the mooon baby.. Hooyah..!!
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