Ex-Federal Reserve chair predicts recession

We don’t have to live like this. It is a policy choice.

Despite jacking up interest rates and using all its usual tricks-of-the-currency-manipulation trade at its disposal in 2022, the Federal Reserve has failed to get a hold of the country’s sky-high inflation—prompting many to predict a coming recession.

Former Fed Chair Alan Greenspan added his name to the list this week stating that an economic recession is the “most likely outcome.” The list of others in the financial community joining him is long. Former New York Federal Reserve President William Dudley called a recession the “likely” result of the Fed’s rate hikes. Dudley’s remarks were reinforced by Chief Investment Officer for Wealth and Investment Management Darrell Cronk who told Fox Business he agreed with this assessment.

“I tend to agree more with Alan Greenspan that it’s (recession) probably the likely outcome,” Cronk said. Though Cronk did disagree that the rate hikes were solely to blame.

“I’m not sure that just simply cutting rates would do it (avoid a recession). There’s the lag effect that we all know about with monetary policy. So typically 6 to 9 months, which means, if you use that as the lag effect, we’re just now feeling the June 75-basis point and maybe the July 75-basis point hikes,” Cronk went on.

“We’ve yet to feel the 75 in September, the 75 in November and the 50 in December, and whatever else we do here in 2023. So that’s going to bite in the first half of 2023,” he added.

Finally Cronk said, “I mean, you know, everybody wants inflation to come down to two, two and a half percent, including Chair Powell of the Federal Reserve. But there’s a lot of pain to go from 6.7 on the CPI, 6.7 down to 2.0 between here and there.”

That’s a pretty grim forecast. The “pain” he references is likely to be felt by consumers not only in the form of ongoing inflation, but also job losses. As we covered at BASEDPolitics a few months ago, the Fed needs to push a few million people out of work in order to achieve the numbers they need to actually even things out. We’re already beginning to see that in the form of layoffs in some sectors like the tech industry.

It can’t be emphasized enough that these economic woes are the direct consequence of big government spending policies, which many in DC and across the country continue to tout as generous, kind-hearted ideas. They’re nothing of the sort. Progressive policies hurt people, and they hurt people who already live on the margins the most.

We don’t have to live like this, it is a policy choice.

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Hannah Cox
Hannah Coxhttp://based-politics.com
Hannah Cox is a libertarian-conservative writer and co-founder of BASEDPolitics. She's also the host of the BASEDPolitics podcast and an experienced political activist.