{"id":1085642,"date":"2023-01-06T08:12:07","date_gmt":"2023-01-06T13:12:07","guid":{"rendered":"https:\/\/bugaluu.com\/news\/are-you-prepared-for-a-hard-landing\/1085642\/"},"modified":"2023-01-06T08:12:07","modified_gmt":"2023-01-06T13:12:07","slug":"are-you-prepared-for-a-hard-landing","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/are-you-prepared-for-a-hard-landing\/1085642\/","title":{"rendered":"Are You Prepared For A Hard Landing?"},"content":{"rendered":"
\"\"<\/a><\/div>\n

Are You Prepared For A Hard Landing?<\/span><\/p>\n

\n

Authored by MN Gordon via EconomicPrism.com,<\/em><\/a><\/p>\n

The New Year brings both optimism and hope.\u00a0 A chance to start fresh.\u00a0 To turn over a new leaf.<\/p>\n

The sentiment is welcome.\u00a0 The outcome, however, can be a grave disappointment.<\/strong><\/p>\n

If you recall, 2022 was supposed to be a year of redemption and prosperity.\u00a0 After the ugly coronavirus fiasco, the economy was finally reopening.\u00a0 The general belief was that the resurgence of economic activity was going to bring a new boom and a new cycle of prosperity.<\/p>\n

But then something unexpected happened.\u00a0 On the first day of market trading, January 3, 2022, the S&P 500 hit a closing peak of 4,796.\u00a0 Yesterday, just over a year later, the S&P 500 closed at 3,808.\u00a0 Down over 20 percent.<\/p>\n

Over this duration, the yield on the 10-Year Treasury note spiked from 1.66 percent to 3.70 percent.\u00a0 In other words, Uncle Sam\u2019s borrowing costs have more than doubled.<\/p>\n

At the same time, transitory inflation proved to be enduring.\u00a0 And gross domestic product (GDP) went negative for the first two quarters of 2022.<\/p>\n

What happened?<\/p>\n

The calendar year may have started anew.\u00a0 But past actions remained.\u00a0 And there was plenty of wreckage from the past to be reconciled.<\/p>\n

Much of this wreckage was created by the central planners at the U.S. Treasury Department and the Federal Reserve.\u00a0 Decades of money printing are not without consequences.\u00a0 And, unfortunately, the consequences dramatically impact your life and your livelihood.<\/strong><\/p>\n

The wreckage doesn\u2019t magically disappear when the calendar hits January 1.\u00a0 Rather, it piles up from one year to the next like rotting refuse at a municipal landfill.<\/p>\n

How will the central planners manipulate your livelihood in 2023?\u00a0 How will Federal Reserve monetary policy influence your job, investments, and discretionary income?<\/p>\n

Here we scratch for answers\u2026<\/p>\n

Foolish Ideas<\/strong><\/h2>\n

Ultra-mega money printing in 2020-21 to counter the effects of government ordered lockdowns resulted in a supply of dollars that was far too great for the economy to absorb.\u00a0 This, along with the shortage of goods and services, also a consequence of government lockdowns, resulted in a situation where too many dollars were chasing too few goods.<\/p>\n

Paying people not to work with printing press money was a foolish idea.\u00a0 Everyone knew it \u2013 or should have known it.\u00a0 Nonetheless, wild theories were concocted to provide the rationale for doing more of it.<\/p>\n

People that should have known better swallowed the bait hook, line, and sinker.\u00a0 For example, gangsta rap pioneer, Ice Cube, upon discovering Modern Monetary Theory in 2020,\u00a0proclaimed<\/a>:<\/p>\n

\n

\u201cAmerica loves to cry broke.\u00a0 But in America money does grow on trees.\u201d<\/em><\/strong><\/p>\n<\/blockquote>\n

The wreckage of ultra-mega money printing caught up with Americans in 2022.\u00a0 Consumer price inflation raged all year.\u00a0 And while the rate of consumer price inflation has slowed, it is still much, much higher than any honest economy can tolerate.<\/p>\n

The latest consumer price index (CPI) report, which was released on December 13, shows consumer prices increased at an annual rate of 7.1 percent in November \u2013 down from 9.1 percent in June.\u00a0 The December CPI will be reported next week.<\/p>\n

At this point, even if the rate of consumer price inflation continues to slow, the Fed has some work to do.\u00a0 If it really wants to contain inflation it must hike rates further to increase borrowing costs.\u00a0 Over time, this should make dollars dearer, in relation to goods and services, and reduce the rate of consumer price inflation.<\/p>\n

Will it work?<\/p>\n

Wrecking the Future<\/strong><\/h2>\n

We believe it eventually will.\u00a0 But the consequence will be severe.\u00a0 Remember, economics is not an exact science.\u00a0 Monetary policy is even less exact.<\/p>\n

How does the Fed know what the supply of dollars should be when it doesn\u2019t know what the demand for dollars will be?<\/p>\n

It\u2019s a question the Fed can\u2019t answer.\u00a0 For the Fed doesn\u2019t know if consumers will continue to chase the price of goods and services higher or if they will start stuffing dollars in their mattresses.\u00a0 No one does.<\/strong><\/p>\n

A recession in 2023 is appearing more and more likely.\u00a0 Thus, what if 2023 turns out to be a year of deflation rather than inflation?<\/p>\n

Under this scenario, additional rate hikes would be a mistake.\u00a0 Still, what can the Fed really do?<\/p>\n

It can guess about the future, and what the demand for dollars will be.\u00a0 Or it can continue to do what it always does.\u00a0 That is, the Fed will look to the past for guidance on how to influence the future.<\/p>\n

Minutes from the December Federal Open Market Committee (FOMC) meeting were\u00a0released<\/a>\u00a0this week.\u00a0 Per the minutes:<\/p>\n

\n

\u201cNo participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023. \u00a0Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which was likely to take some time.\u201d<\/em><\/p>\n<\/blockquote>\n

Given the current CPI reading, this means there will be additional rate hikes\u2026and associated consequences.\u00a0 The Fed must wreck the future to save it.<\/p>\n

Are You Prepared for a Hard Landing?<\/strong><\/h2>\n

How will the economy react to interest rates that remain relatively higher for longer?<\/p>\n<\/p>\n

By this, the idea that there will be a soft landing seems highly unlikely.\u00a0 The economy, after decades of ultra-low interest rates, is not equipped to easily accommodate a sustained period of relatively higher interest rates.<\/strong><\/p>\n

There\u2019s simply too much debt outstanding.\u00a0 Government debt (federal, state, and local).\u00a0 Corporate debt.\u00a0 Individual consumer debt.\u00a0 We anticipate there will be significant challenges making debt payments in 2023.<\/p>\n

The effect of higher interest rates will be twofold.\u00a0<\/strong><\/p>\n

    \n
  1. \n

    Less borrowing and spending will result in less economic activity, which will lead to higher unemployment.\u00a0<\/p>\n<\/li>\n

  2. \n

    Slower (or declining) economic growth will make servicing debt more difficult, which will be further exacerbated by relatively higher interest rates.<\/p>\n<\/li>\n<\/ol>\n

    In fact, it\u2019s already happening<\/strong>.\u00a0 Amazon CEO, Andy Jassy, announced this week that the company plans to RIF (reduction in force)\u00a018,000 workers<\/a>.\u00a0 This is in addition to the nearly 125,000 employees from large U.S. companies that were RIFed in 2022, according to the\u00a0Forbes layoff tracker<\/a><\/em>.<\/p>\n

    Many of these workers will land on their feet and will continue paying their debts without a hitch.\u00a0 But many won\u2019t.<\/p>\n

    Past mistakes and misallocated capital are being grossly exposed by relatively higher interest rates.\u00a0 Soon, this will all rollup into a massive financial panic.<\/strong><\/p>\n

    Perhaps a big corporate or municipal government default will be the triggering event.\u00a0 Maybe a giant investment fund will\u00a0suspend withdrawals<\/a>.<\/p>\n

    Then the reality that a Fed bailout is not available for the first time since the \u2018Fed put\u2019 was instituted in 1987 will set in.<\/p>\n

    As the debt market and stock market simultaneously melt down, what assets will capital panic into?\u00a0 Will it rush into the dollar?\u00a0 Will it stampede into gold?\u00a0 What about oil or something else?<\/p>\n

    Without question, a hard landing is coming.\u00a0 Are you prepared?<\/strong><\/p>\n

    *\u00a0 *\u00a0 *<\/p>\n

    Anticipating and positioning your capital ahead of the panic stampede is an opportunity to obtain life-changing wealth.\u00a0\u00a0Click Here if you\u2019re interested in learning more about this unique opportunity, and how to exploit it!<\/a><\/em><\/p>\n<\/div>\n

    Tyler Durden<\/a><\/span>
    \nFri, 01\/06\/2023 – 11:07<\/span><\/p>\n

    From:Zerohedge<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    Are You Prepared For A Hard Landing? Authored by MN Gordon via EconomicPrism.com, The New Year brings both optimism and hope.\u00a0 A chance to start…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1085642","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1085642","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1085642"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1085642\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1085642"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1085642"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1085642"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}