Conundrum #1: Rate HIKE Bubbles
They say rate cuts stimulate, but then nothing gets stimulating. Then they tell us rate hikes restrain the economy and credit. However, you might have noticed some of the worst bubble behaviors witnessed at least in the 21s century have coincided with higher ST policy rates. Is there a connection? Does hiking make bubbles worse? If it does, that would have profound implications for a lot more than just subprime mortgages and private credit.
