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User Info 2021: The Year In Review, And A Wee Light In The Tunnel; entered at 2021-12-27 10:48:43
Posts: 3262
Registered: 2021-07-10 FEMA Region 4
I'm not convinced the Fed will raise rates, much less drain any liquidity, in an election year even if they really, really want to do so

They (and the Dems) are between a rock and a hard place.

Do they aggressively raise rates now to stop inflation, but take a huge political hit in the 2022 midterms (even worse than predicted right now) as a result of a stock market decline and recession? This gives the economy a chance to recover so they can salvage 2024, but even if a Dem president is re-elected in 2024, the 2022 wipeout will be so bad, they will likely control neither the House nor the Senate.

Or do they delay raising rates until immediately after the midterms to try to minimize political losses in 2022, but this puts the 2024 election at risk since threading that needle will be tough?

Or do they half-ass interest rate increases and risk the worst of both worlds: a catastrophic 2022 midterm election, and persistent inflation into the 2024 election?
2021-12-27 10:48:43