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  • Christian Armbruester


Interest rates are going to keep rising in the United States of America. That’s according to the all-powerful FOMC and goes for the rest of the world too. The question is, when will the era of hard cash come to an end? The numbers don’t lie. As a measure of inflation CPI may be flawed, but it is trading at the highest level in fifty years, and the only known medicine to treat rising prices is to curb demand.

However, we also have forward looking indicators, lead times, lags, and an irrational consumer to deal with, which lest we forget, contributes more than two thirds of US GDP. The economy is still strong, but is it driving off a cliff? What about supply chain issues, labour tightness, and the energy crisis? It’s the blind leading the blind, and explains much of the prevailing narrative, but that does not mean we don’t have a problem.

Everyone is getting obliterated at the moment. Stocks are down, bonds are down, commodities are down, even property is down, and we can’t seem to be able to borrow ourselves out of a hole anymore. The yield curve is no longer just inverted, it now resembles a giant ski-jumping ramp. If that wasn’t strange enough, consider that 10-Year Treasuries have had the worst performance this year since 1788!

Where does all of this leave us? It’s easier to revive the patient with stimulus, than risk total collapse, the Fed said. That may not sound very reassuring, but we do know that our next fix is coming, one way or another. Maybe our addiction to cheap money is not a drug, but a dosage problem and the first one is always free. See you on the other side.


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