This seems to be the gist of the author's case. What the piece fails to consider is the possibility that "much tighter monetary policy" is transitory. Really, the author goes on as if we're 800 basis points into the Fed hiking cycle when it's just barely lifted off. And QT, although it is supposed to have started, has done very, very little to turn the Fed's balance sheet around. Those MBS are still safely in the lockbox.
How exactly does this author think the Fed will react to another housing market crash? One that stretches out to an election year? One like 2008 that permeates the entire economy?
It's gonna be bazookas and "whatever it takes" as far as the eye can see. It won't matter what the CPI is reading.
I mean, I think if your thing always rises up and then collapses when the scam du jour implodes, I think you have to wonder if maybe its valuation is based on scams.
The question, of course, is whether enough people will fall for whatever the next scam turns out to be, so that it can collapse in properly dramatic fashion in 2025 or so.
We have not even functionally started Qt yet and rates are under 2 percent and there are already massive black clouds forming over the economy. All the while debt to gdp is at 130%. And this is the moment that the Era of easy money is over?
I think looking back in 10 years, we will say that the Era of easy money hasn't started yet.
