El Erian Thinks the FED Will Flip-Flop on Rates in Response to Demand Side Contraction

Posted originally on the conservative tree house on June 17, 2022 | Sundance 

Mohamed El-Erian, a Blooomberg Opinion contributor, cracks me up in his efforts to avoid speaking directly.  Generally, El-Erian knows the situation, he was one of the first to identify the issue with inflation in March 2021.   However, he continues avoiding any mention that the U.S. economy is already in a negative position for growth.

Consider this…. In this interview El-Erian says he believes the Fed will flip-flop and lower rates in reaction to what is happening in the economy.  Keep in mind, the only reason for the Fed to reverse rates so quickly is if the economy is already in a demand side contraction and the latest .75% increase in rate is being done into a negative GDP environment.

Of course, the reality is exactly that.  The U.S. economy is already contracting, mostly because of inflation chewing up the supply side, and the Fed is factually raising interest rates into an economy already in a demand side recession.  But everyone must pretend that’s not the case, so here’s El-Erian saying Jerome Powell is going to end up reversing himself, flip-flopping, which doesn’t make sense if you don’t first establish that the economy is right now shrinking as he speaks.  WATCH:

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