Basically what happened was that the combination of stimulus and Zero rates created a huge inflation wave in 2021 that caught the FED off guard.
I have a huge problem with that statement. I'm not saying anything you're saying is wrong. It's more the Fed being caught off guard. "The Federal Reserve saying inflation caught them by surprise is like an army saying an invasion caught them by surprise." If what you're saying is true, you failed at your job.
So now the FED is stuck.
It can't cut interest rates in the middle of a large expansion without risking another inflation wave. It failed to raise market rates, because the market no longer responds due to the ever larger government deficit funding the economy.
The Fed is stuck because we have a two-speeds economy. All economic growth of this year is being driven by a very small minority of stocks. These small minority of stocks all tend to be in tech and was driven by the AI craze. The rest of the economy is flat to going down. In the S&P 500 prior to a few weeks ago when the markets took Jerome Powell's statement as incredibly dovish and a sign of instant rate cuts, it was 7 vs. 493. So if you're tech or your life is connected to tech, you're doing awesome. If you're not in tech or your life is not connected to tech, chances are you're middling to sucking.
One obvious problem with having economic performance driven by one very narrow sector is if that sector goes down...
