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Tuesday, July 18, 2017

This Expansion Will End in a Fizzle, Not a Bang

Tim Duy:

This Expansion Will End in a Fizzle, Not a Bang: The Fed is growing increasingly concerned that this expansion will end like the last two, with a collapse in asset prices that brings down the economy. That concern will lead the central bank down the path of excessive tightening. Worse, that logic misses a key point. In both of the last two cycles, there was a sizable imbalance in the economy that extended beyond financial assets themselves. So far, the current environment lacks such an imbalance. That suggests the expansion ends with more of a fizzle than a bang. ...[Continued at Bloomberg Prophets]...

    Posted by on Tuesday, July 18, 2017 at 08:33 AM in Economics, Monetary Policy | Permalink  Comments (120)


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