I’m having a hard time wrapping my head around this.
Tariffs are inflationary—they raise the cost of goods and services and can prevent potential Fed rate cuts.
However, increased costs of goods and services can reduce demand, leading to economic contraction, which is deflationary.
Corporate tax cuts are inflationary, while reduced government spending is deflationary.
It’s been a while since I studied macroeconomics.
Are we heading toward stagflation? What are your thoughts?
How does the Fed adjust rates in a stagflationary environment?
Taking it a step further—what is DJT trying to achieve with the trade war?