Gerard Kavanagh
The lay of the land
So now the Fed and many other central banks are in the tightening cycle, they are talking tough (primarily because they completely missed the reality that inflation is not transitory). So how long does this demand destroying, recession (depression) inducing, potential financial armageddon catalyst go on for ???? Well, we've been pretty clear cut in our view that inflation is the lesser evil, that central banks having painted themselves into a corner and having engineered sod all economic growth and only asset price inflation with a lovely tail risk of the largest debt mountain in history really do not have a choice but to relent.

As this tweet ably sums up:
That is why we continue to assume that inflation is the lesser evil, and the Fed will have to adapt (likely via repression) to that reality. The risk, of course, is the Fed believes its own BS (regarding Volker) and tips the whole system into a crisis ..... as they have done in many instances in the last 50 years.

There is also the law of unintended consequences, a left-field event that increases risk if not outright calamity:

Rock meet hard place, there are no easy options here though as Hugh Hendry has suggested there is a potentially radical way out of this:

So this is the dawn of chaos, certainly for now, and the era of free money & zro risk is OVER:
This is a time to seek shelter and protect your wealth. Yeah, but .....

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