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Ditching a Speeding Economy Is as Hard as It Sounds
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Don’t Let the Fed Crash the Truck
Managing the $20 trillion U.S. economy is kind of like driving a truck filled with gasoline down a mountain road with no brakes. Sometimes, in order to avoid a truly horrific accident, you have to run off the road, where you risk cracking an axle or whatever (I’m not good at cars, or writing, or writing about cars). Then you have to repair the truck, get it back on the road and start the process all over again.
The Federal Reserve is currently in the running-the-truck-off-the-road phase of the cycle, and today it contributed to that effort by raising its key policy interest rate by half a percentage point, the biggest wheel-jerking in 22 years. It also promised to dump assets starting next month, and Chairman Jay Powell warned more 50-basis-point hikes were on the way.
The only question now is how violent the resulting crash will be. Every so often, the truck rolls gently into a sunlit meadow filled with wildflowers and bluebirds. The Fed has a nice snack […]