Here’s what happened the last time the Fed attempted to shrink its balance sheet and hike rates simultaneously

The Reformed Broker/Joshua M. Brown/1-7-2022

cartoon showing a boat riding the rising tide“Two separate major corrections occurred that year, culminating with a nasty 20% crash into Christmas Eve which finally forced the Fed to say “Okay, just kidding. Not only are we not raising rates anymore, actually, the next few moves will be cuts. Merry Christmas, we’re sorry.” I’m paraphrasing, but that’s literally what happened.”

USAGOLD note: For some reason unbeknownst to us and most the rest of the investment community, the Fed feels compelled to create the illusion of setting a new course. Meanwhile, economic and financial forces, it knows full well, are unlikely to allow it. So here we go again …… The bond market will be the final arbiter.


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