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- These Charts Show Why the Fed is Terrified to Stop Raising Interest Rates and Why Nasdaq is Ripping Higher
These Charts Show Why the Fed is Terrified to Stop Raising Interest Rates and Why Nasdaq is Ripping Higher
by Pam Martens and Russ Martens Wall Street on Parade
The top chart above shows one of the most erratic eras in Federal Reserve policy-making history. In the 70s and early 80s, the Fed would slam on the brakes to bring down inflation by raising its benchmark rate (known as the Fed Funds rate), then slam its foot on the gas to revive the economy by cutting the Fed Funds rate. But because the Fed stopped raising rates too soon each time, it had to then raise rates to an ever staggering level to curb runaway inflation, eventually reaching over 20 percent in 1981.
Today, the Fed is woefully mindful of these mistakes. It is hoping to signal that it is planning higher interest rates for longer and follow through on that signal without killing the economy, and the markets, and the banks, and consumer confidence in the process.