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Hike Until Something Breaks — Brian Romanchuk

Summary:
Although neoclassical macroeconomic theory does its utmost to obfuscate matters, monetary policy in practice is straightforward: central bankers react with a lag to economic data, and if they are panicked about inflation, they hike rates until something breaks. Although that description is more flippant than how conventional economists would describe the situation, it probably represents a consensus view. However, there is a hidden complexity: do things “break” because of rate hikes, or do they break on their own?Bond EconomicsHike Until Something BreaksBrian Romanchukhttp://www.bondeconomics.com/2022/06/hike-until-something-breaks.html

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Although neoclassical macroeconomic theory does its utmost to obfuscate matters, monetary policy in practice is straightforward: central bankers react with a lag to economic data, and if they are panicked about inflation, they hike rates until something breaks. Although that description is more flippant than how conventional economists would describe the situation, it probably represents a consensus view. However, there is a hidden complexity: do things “break” because of rate hikes, or do they break on their own?
Bond Economics
Hike Until Something Breaks
Brian Romanchuk
http://www.bondeconomics.com/2022/06/hike-until-something-breaks.html
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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