The current economic condition of the United States isn’t good. Inflation is off the charts, and the only way to deal with it is for the Federal Reserve to increase interest rates. So, in order words, the Federal Reserve wants you to lose money so that inflation comes under control. Raising interest rates mean that the economy will suffer, which could lead to recession and a bear stock and crypto market.
The Feds are getting aggresive
Initially, the Feds have been following the method of preparing traders in advance for the upcoming changes in monetary policies. This allowed traders to reduce losses or even make profits based on the market condition. However, Fed chairman Jerome Powell recently announced that the Central Banks would not continue this and prepare traders in advance. That indirectly means that they don’t mind if you lose money and ultimately. It also seems that the Feds want to see lower stock prices which will also mean lower crypto prices.
Now, one important thing to note here is that you don’t lose money until you sell. And if you hold fundamentally sound stocks and crypto projects, they will rise in the future. However, in the short term, you might see losses based on what the Feds are doing.
We are at 8.5% inflation right now, and the Feds are targeting to bring it down to 2%. In other words, we have a long way to go, and the economic crisis will continue. But the unemployment rate is still low, and new jobs are coming up, which means more spending. This ultimately means the Feds need to take stronger steps.
The plan
The Feds wanting the market to go down could sound good for inflation, but if investors turn too bearish, we could see a devastating crash. It will be important to maintain the balance of perfect control over spending and not being too restrictive. The more aggression the Feds show in increasing interest rates, the more pain they are going to cause in the stock and crypto market.
Do you also think the Federal Reserve wants you to lose money to control inflation? And how and when do you think this economic crisis will end? Let us know in the comments below. And, if you found your content informative, do share it with your family and friends.
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