Things are only getting harder for the Fed

Source: Financial Times
by Kenneth Rogoff

“The Fed’s expansive actions to prevent the Silicon Valley Bank collapse from becoming systemic, followed by the Suisse National Bank’s massive lifeline to troubled Credit Suisse, left little doubt this week that financial leaders are determined to act decisively when fear starts to set in. Let us leave moral hazard for another day. But even if risks of a 2023 financial Armageddon have been contained, not all the differences with 2008 are quite so reassuring. Back then, inflation was a non-issue and deflation — falling prices — quickly became one. Today, core inflation in the US and Europe is still running hot, and one really has to strain the definition of ‘transitory’ to argue that it is not a problem. Global debt, both public and private, has also skyrocketed.” (03/17/23)