In the past, we have seen that three successive significant hikes in Fed interest rates have generally marked the beginning of bear markets and impending recessions. Over the last few days we have seen many predictions of up to even seven successive hikes.
I don’t believe the Fed should increase interest at this time….
The bear market and the costly, protracted recession that began in 1981, for example, came about solely because the Fed increased the discount rate in rapid succession on September 26,November 17, and December 5 of 1980. Its fourth increase, on May 8,1981, thrust the discount rate to an all-time high of 14%. That finished off the U.S. economy, the basic industries, and the stock market.
Let us go back in time to a little history:
October 1979 – Volcker’s Announcement of Anti-Inflation Measures
1965–1982 – The Great Inflation