🚨 YEONJUN “It’s really different this time” – 40 years of economic revolution?
📈 Prices go up, jobs go down… will the nightmare of the 1970s come back?
Wall Street experts warn in unison ahead of the Sept. 17 Fed meeting.
“This rate cut is completely different from the past.”
🎯 Why is it different this time?
Typically, the Fed moves in clear situations:
Inflation ↑ → Economic control by raising interest rates
Unemployment ↑ → Economic stimulus by lowering interest rates
But now? 🤯
Consumer prices in August: up 2.9% (up again!)
Unemployment benefit claimants: Three-year high
Whatever the Fed does, it’s a dilemma that one side has to give up.
🔮 Morgan Stanley & JPMorgan: “We may perceive rate cuts as a harbinger of recession”
Morgan Stanley: “Prices Won’t Let The Fed Lower Rates At The Rate That Markets Want”
JPMorgan: “If interest rate cuts begin, the stock market could become rather cautious”
Why? In the past, interest rate cuts = economic stimulus, but…
Interest rate cuts = It is likely to be interpreted as first aid to prevent a recession. 😰
The problem is that the job market is cooling down rapidly with prices still rising. The Fed can’t afford to boost the economy by lowering interest rates as much as it wants, because prices could jump again. But what if the job market continues to slow down? That’s when the fear of the market starts.
💡 The key insight is: the rules of the game have changed.
What’s really important here is that the economic laws that worked for 40 years no longer work.
‘Philips curve’ (unemployment ↓ = prices ↑) is completely broken.
As Trump’s tariffs + immigration policies impose supply shocks, the Fed’s traditional demand-managed monetary policy is being crippled.
🎪 Conclusion: A whole new game has begun
Now, a rate cut may not just be a catalyst to lift stocks.
The Fed decision is not just a restart of the rate-cutting cycle.
It is likely to be a historic turning point for the U.S. economy from the era of globalization and deflation to the era of localization and inflation.
👉