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Normalizing after 7 Years of Extreme Stimulus?

Normalizing after 7 Years of Extreme Stimulus? #Fed


  • Short-term rate of zero for seven years following the global financial crisis in 2008
  • Long-term rate was cut in half to a low of 2.5% from 5%
  • Fed has begun to normalize policy rate normal at 3% means a massive 6x increase from the current level
  • Normal rate of 2.7% would mean massive 5x increase in short-term rates
  • Interest costs would rise too much, this is the main constraint


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