Bear markets and bank runs aren’t good for most people. But let’s try to look at the upside if the Fed destroys the middle class, shall we? Thinking in extremes provides clarity to help make better decisions.
To set the stage, we know at least these three things:
- The Fed cares more about its legacy than supporting the middle class. All the Fed Governors are rich, so they will survive just fine as the economy goes down the tubes. To them, the economy is just made out of numbers, not people.
- We’ve already heard the warnings about economic devastation if the terminal Fed Funds rate goes beyond 5% and stays there despite slowing inflation. Yet, the Fed seems determined to continue hiking until more things break.
- One of the easiest ways to be a savior is to first be the destroyer. People tend to appreciate what you’ve done for them lately the most.