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- Doom-Loop I: “Bringing Demand Forward” Will No Longer Save Us
Doom-Loop I: “Bringing Demand Forward” Will No Longer Save Us
by Charles Hugh Smith Of Two Minds
The fantasy is that inflation will plummet to zero and we can all go back to “Bringing Demand Forward.” The reality is what’s plummeting is demand.
The US economy has been saved time and again over the past two decades by this one weird trick: “Bringing Demand Forward” by lowering interest rates and lending standards so Americans could continue to buy stuff they didn’t really need because the monthly payment dropped as interest rates were pushed toward zero.
Every time the economy faltered, the Federal Reserve would push interest rates down to “Bring Demand Forward” by goosing debt-based consumption: OK, so you don’t actually need a new car, but come on, the new car loan is only 1.9%, you can afford the monthly nut. Or hey, it’s zero-percent financing for a couple years. Just go for it, get that new vehicle. Live large, you can swing it.