Visibility: Public
Read/Watch Time: 24 minutes (only a couple of nuggets)
Mike Tyson once said, “Everyone has a plan until they get punched in the mouth.”
We have discussed here previously that before the next big decline, something will break. I’ve also said that the Federal Reserve will continue to tighten until something breaks. Here are some hard punches in the last few days:
First Punch – Fed Chair Jerome Powell says (once again) that he will fight inflation and it’s not coming down fast enough.
Second Punch – He also says that he may have to increase the pace of rate hikes (I assume from 0.25% to 0.50% on March 22nd).
Third Punch – SilverGate Bank is winding down operations and was very instrumental in the financing of Crypto and Blockchain enterprises.
Fourth Punch – Biden unveils his $3.6 Trillion tax hike plan on higher income earners, wealthy Americans and big corporations.
So, I asked ChatGPT about inflation. Here’s how it went…
There are several ways to fight inflation, including:
- Monetary Policy: Central banks can use monetary policy tools, such as raising interest rates, to reduce inflation by making it more expensive to borrow money, which reduces spending and demand.
- Fiscal Policy: Governments can use fiscal policy tools, such as reducing government spending or increasing taxes, to slow down economic growth and reduce demand, which can help curb inflation.
- Price Controls: Governments can set price controls on essential goods and services to prevent excessive price increases. However, this approach can also lead to shortages and reduced quality.
- Supply-Side Policies: Governments can implement policies that increase the supply of goods and services, such as improving infrastructure, reducing regulatory barriers, and promoting competition. This can help increase the production of goods and services, reducing their prices.
- Wage and Price Guidelines: Governments can establish wage and price guidelines to prevent excessive wage and price increases, which can help reduce inflationary pressure.
- International Trade: International trade can help reduce inflation by increasing the supply of goods and services, promoting competition, and reducing prices. This is particularly effective when countries with low inflation levels can export their goods to countries with high inflation rates.
It’s worth noting that each of these approaches has its own advantages and disadvantages, and there is no one-size-fits-all solution to fighting inflation. Governments and central banks typically use a combination of these approaches to manage inflation effectively.
Some of these should look familiar based on the discussions on this site.
Please feel free to teach this to your family and friends. We appreciate the referrals.
Here’s the video link: https://squiggletrader.com/wp-content/uploads/2023/03/Mid-Week-Brief-Punched-03092023.mp4
Cheers!
Bo – Chief Squiggler
Disclaimer
This communication is not a recommendation to buy or sell any security. It is not to be considered financial or investment advice. This is an educational and training tool only. If a specific security is mentioned, it is for illustrative and hypothetical purposes. You must use your own knowledge to determine what to trade, how much to trade and when to buy or sell. Investing and Trading involves risk, and you can and will lose money. Past performance is no indication of future results. You should practice with fake/virtual money (paper trading) before risking real money. All communications and videos are for members only and are not to be shared. Consider all content copyrighted.