[Barrera]

That is the consensus view. But what if it doesn't work? What if the rate hikes keep coming fast and furious and the CPI keeps rising even faster?

Recall that until the late 1970's the thought that inflation could persist through a recession seemed absurd.

Nobody is ready for that scenario because they think it's impossible. But then again, how many predicted the situation we find ourselves in right now?

[linuxftw]

Many people predicted the situation we're in right now. What perplexed us all is that the ZIRP era lasted as long as it did without having the current effect.

We're heading for a consumer debt crisis. Outside of the tech bubble, average people are in a dire situation.

> What if the rate hikes keep coming fast and furious and the CPI keeps rising even faster?

Same thing that happened with the housing crisis in 2008. Consumers are going to default, and instead of the banks sharing the risk in the market they helped over inflate, Wall Street's going to get bailed out, because entering a deflationary environment is absolutely off the table.

[phkahler]

>> Nobody is ready for that scenario because they think it's impossible.

Stagflation? Of course it's possible, that was the 1970's. The question is if the Fed is willing to do the unpopular thing needed to stop it. And then the follow-on is weather congress is willing to address the federal budget and pay down the debt (obviously not since they already missed the chance to do it before rates rise) painful as that will be.

As long as we're all fucked together (including rich people and wall street) I think we'll be OK in the end. It's the trying to play favorites that is probably causing the most damage.

[koolba]

> But what if it doesn't work? What if the rate hikes keep coming fast and furious and the CPI keeps rising even faster?

The beatings will continue until CPI improves.

[abduhl]

This is fear mongering. If what you say might happen ends up happening we are fucked. There’s no reason to even consider it because there is no way to hedge or protect against it.

It’s like showing up to a job site with all the tools in the world and worrying that you’ll need a tool that doesn’t exist. Do not fall into paralysis by analysis.

[truffdog]

The end of that inflationary period coincided with oil prices dropping, which isn't really something Volcker had any control over. Real supply shocks really are real supply shocks.