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Did The Federal Reserve Just Back Down? | Joseph Wang

Inflection Point

00:00

The Reverse Wealth Effect of the Fed's Aggressive Tightening

The Fed's aggressive tightening led to a sizable reverse wealth effect in 2022. But this has been largely reversed. So you can have continued spending driven by wage growth as we have now, but part of it could also be driven by appreciation and assets so people are wealthier. Warren Mosler argues that the government running fiscal deficits is stimulative while the Fed is paying out interest on over $2 trillion at 5%.

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