US Fed: Between Scylla and Charybdis

Published in Business Line on June 18, 2007

Analysts assume that when US enters a recession, all that the Fed has to do is to cut rates and that will take care of everything by boosting consumer spending/corporate investments and thus take care of the problem of recession.

The article shows the fallacy with the above argument and also explains why the outcomes for the US in the years ahead is going to be stagflation i.e. recession and increased interest rates.