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Pittsburg, Kansas | Depends on which way it plays out. If the Fed "eased" by lowering interest rates (look at a chart of how many years interest rates have been dropping), then it stands to reason as they reduce their balance sheet the opposite will happen. If that causes a contraction and recession I would expect ag to also not be spared.
But I suspect that once a recession happens (and we are due - they tend to happen in cycles) the Fed will be obliged to "do something". But what can they do other than what they always do?
So I would expect a short recession, then the Fed's response will be the only thing they know how to do, then some unpleasant stagflation that they do not know how to get under control just like it was a problem in the 70's. I think we are already seeing some stagflation, it is just not being reflected in official statistics.
But the problem will be of magnitudes worse than the 70's, because the imbalances and easy credit low interest has went on much longer and to a much higher degree.
Time line? Wish I knew. It would make all the difference in the world. But I can not explain Bitcoin or the allure people had with tulips nor with investing in the South Seas venture so to time what the Fed actions and public response will be is way above my pay grade. I just plan on surviving it. I don't expect to get rich from it.
John
Edited by John Burns 12/12/2017 20:14
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Financial sector expansion.
