Peter St. Onge
👤 SpeakerAppearances Over Time
Podcast Appearances
If you look at a chart of recessions and a chart of Federal Reserve interest rates, they're almost one to one.
I mean, it's perfect.
COVID was an outlier because...
We can speculate where COVID come from.
But generally, recessions are like one for one.
They jack the rates low.
Inflation takes off because money's cheap.
When interest rates are low, borrowing is really cheap.
And effectively, most borrowing is printed by banks.
Like when you go to the bank to borrow money for a mortgage, they don't go back in the vault and get it.
They literally create it.
They're given a license.
They're given permission to do this by the government.
So the rates are low.
Money takes off.
Money is printed.
That makes inflation go up.
At that point, the Fed wants to get out of the headlines.
People are getting upset.
They don't want the pitchforks to come out over the inflation.