The topic of recession has been all over the mainstream media lately and for good reason. While some may think that the worst is behind us, I believe that we are still headed in that direction. Unfortunately, the Federal Reserve's actions may worsen the effects of the impending recession. In fact, it could cause many Americans to lose everything, including their jobs.
The central planners at the Federal Reserve are heavily focused on the Phillips Curve, a framework that draws an inverse relationship between the inflation rate and the unemployment rate. They believe that if the unemployment rate is too low and inflation is too high, they must trigger a recession to increase unemployment and decrease inflation.
This focus on the unemployment rate, means they are ignoring other important economic indicators such as the amount of currency units in circulation and the supply and demand of goods and services. They are willing to raise rates, even if it means worsening the recession and costing millions of Americans their jobs and savings.
What's worse is that we are in a rolling banking crisis, with more bank failures this year than during the Great Financial Crisis.
As a result, we are also experiencing a credit contraction, which means fewer currency units are available to chase goods and services.
The actions of the Federal Reserve may exacerbate the upcoming recession, but as individuals, we can take steps to protect ourselves financially. We need to be mindful of our savings and investments and prepare for potential job losses.
Overall, we must keep a critical eye on the actions of the Federal Reserve and remember that their focus should not be solely on the unemployment rate, but on all economic indicators that impact inflation and the well-being of American citizens.