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some economists fear that the FED humbled by staying too long and saying transitor is now staying too long in terms of of raising and we don't know yet we haven't had an earnings season we don't know how it's really affecting things they may break something we may already be in a sharp slowdown maybe they stay at this party too long the tightening party you don't think so so there's two elements of this can they stop can they pivot no they cannot they cannot because the data doesn't give them enough of a green light but importantly that credibility has been hit really hard will they end up overdoing it most likely yes so they've gotten themselves into this Hall and unfortunately they don't know how to get out of this hole there's no ladder out of this whole people have to realize there's no ladder out of this world should we say gee you guys your credibility was damaged now you've got to regain your credibility is that good for us and for the country that they have credibility or are we paying for their mistake with a recession that that we really you know I don't feel like paying for their mistake with a recession just so they can regain credibility well first of all you have no choice but to pay for their mistakes and that's one of the tragedies of the situation yes we're all going to pay for their mistakes and some of some people are already paying there was another concern that you brought up Becky this morning with Roger which is it's not just about inflation recession it's also about financial stability that's the third leg of this thing so yes Joe I don't know how we can avoid paying for this mistake because they have been late they mischaracterize inflation as Transit story when they finally recognize their mistake they didn't act remember in the middle of March when we printed the February inflation print over seven percent they were still injecting liquidity into this economy that's last March Muhammad wait a second when you say the third part of the equation the financial stability do you think there is the risk that things will be broken in the markets If they raise another 75 basis points this is the most front-loaded interest rate hiking cycle we've had for decades we're coming from zero interest rates the whole system got conditioned to believe that zero interest rate was forever that injections of liquidity were predictable and now we're addressing the UK has given us a warning sign but there are people in the market who still haven't taken the FED seriously so they have not gotten themselves to a place where they're not going to have massive issues If the Fed doesn't slow down so we have first of all this is the non-banks not the banks so that's the good news because the banks are in the middle of the payments and settlement system the non-banks are not so that's that's good news yes there are certain you can start with the zombie companies who are finding it much harder to refinance and if they can get refinancing the cost of this refinancing makes the numbers look completely different then you can go to various investors who over Levert that that's going to be an issue so yeah I'm we have to keep an eye on the third element which is financial stability it's not just about inflation and growth it's also about financial that's almost an argument for slowing down and maybe only going 50 basis points of that at the next meeting just because it's not going to help your credibility if you're doing this for your credibility things break and you have to instantaneously backtrack like the bank of England I'm at 50.
okay so this is at 50. they don't give it damn but I'm in I'm at 50. you think they'll do 50. no I want them to do I think they should do 50. they can't it absolutely can't if they do 50 then we will be at this table talking about stagflation so we have some people on saying who was it Mr Wonderful there are companies that are they're not even noticing any slowdown at all right now and then I don't know if I I think that employment reports are are lagging so that could happen really quickly we could see some issues there or maybe not but is the economy really really still strong and is can we use three and a half percent as an actual real employment number right now so so I think the labor market is strong with one really important qualification labor force participation and that came down again and remember there's two answers to our issues more labor force participation and more productivity that is what we need and that solves so many issues in in the economy today and the labor report was strong across the board except for labor force participation do you think Mr New Normal do you think the new because you you sort of coined that term do you think there's a new normal uh in terms of how we do business and how we work in this country in terms of hybrid remote uh so so I think of us as and you're not going to like this Joe but as on a bumpy journey to a new destination so what does the new destination look like yeah first tied to financial conditions no more zero interest rates no more injections of liquidity that's gone people at home in their basement on Zoom calls no hold on hold on the second element is a different type of globalization and the third element is we're going to struggle at the global economy to provide high growth we don't have potent growth models anymore the US is in a much better situation than other countries but the globe as a whole has issues
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