Albert Edwards: Fed to blow up world at 1% interest rate

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Albert Edwards with an entertaining read. I don’t know where the US terminal rate level is, other than it is much lower than markets think.

Moreover, if the SocGen estimate of real monetary tightening via QT is accurate then the question arises how can monetary conditions tighten enough so quickly to spook the Fed into stopping. Put another way, what will be the major transmission mechanism into the real economy to spook the Fed so fast?

My answer is the stock market. 

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.