What if the “Black Swan” of 2023 Is the Fed Succeeds? by Charles Hugh Smith

Higher interest rates may end up hurting and helping all the right people. From Charles Hugh Smith at oftwominds.com:

If the Fed succeeding is a “Black Swan,” bring it on.

What if the “Black Swan” of 2023 is the Federal Reserve succeeds? Two stipulations here:

1. “Black Swan” is in quotes because the common usage has widened to include events that don’t match Nassim Taleb’s original criteria / definition of black swan; the term now includes events considered unlikely or that are off the radar screens of both the media and the alt-media.

2. The definition of “Fed success” is not as simple as the media and the alt-media present it.

In the conventional telling, the Fed made a policy mistake in keeping interest rates and quantitative easing (QE) in place for too long, and now it’s made a policy mistake in reversing those policies. Huh? So ZIRP/QE was a policy mistake, OK, we get that. But reversing those policy mistakes is also a policy mistake? Then what isn’t a policy mistake? Doing nothing? But wait, isn’t “doing nothing” maintaining ZIRP/QE or ZIRP/QE Lite?

This narrative makes no sense.

The other conventional narrative has the Fed’s policy mistake as tightening financial conditions, a.k.a. reversing ZIRP/QE, too much too quickly, as this will cause a recession. OK, we get the avoidance of recession is considered “a good thing,” but aren’t recessions an essential cleansing of excessive debt and speculation, i.e. an essential part of the business cycle without with bad debt, zombies and malinvestments build up to levels that threaten the stability of the entire system?

Yes, recessions are an essential part of the business cycle. So avoiding recessions is systemically disastrous. So according to this narrative, the Fed should “do whatever it takes” to avoid recession, even though a long-overdue recession is desperately needed to cleanse the deadwood, bad debt, zombie enterprises and speculative excesses from the system.

So this narrative is also nonsense.

Continue reading→

One response to “What if the “Black Swan” of 2023 Is the Fed Succeeds? by Charles Hugh Smith

  1. Hello Charles, I would like to make this simple as possible. I would like to talk to you directly. My best email is: jgoodplayer@yahoo.com
    Please help me shorten this process I need to explain a better path for the future than what you are on now. Here is a must watch video that makes the major points: 1) The system cannot be fixed from within the system. Fake fiat eventually goes to zero. A new parallel system is beginning already. It is the only fix.
    2) When money is manipulated at the base layer, communism and capitalism are the same.

    Please watch the video and contact me.
    Thank you, Jeff Greenlee/Cafayate, Argentina
    jgoodplayer@yahoo.com

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.