The World Bank just warned that the US economic collapse is starting, and that the global recession will deepen as central banks continue to raise interest rates. The Federal Reserve is set to raise interest rates by at least 75 basis points at the Fed September Meeting taking place on Tuesday and Wednesday.
The world bank is warning that the u.s economy is starting to collapse and it’s going to get worse as the fed continues to raise interest rates hi guys it’s doc curry and the world bank just warned that the u.s economy is starting to collapse when the fed raises interest rates on wednesday it is going to deepen the recession you need to be ready for what’s coming so
Let’s get into it so how did we get to the point where the world bank felt the need to warn of an economic collapse well a little over two years ago as the world was dealing with a global pandemic and everything was shutting down the federal reserve the government congress they all got together and decided to print or create trillions of dollars in u.s currency this
Had the effect of doubling the monetary supply overnight and as people add twice as much money to spend all of a sudden that resulted in inflation skyrocketing as a lot of buying power came into the market with not enough supply available to meet this new increase in demand and as inflation started to skyrocket this caused its own set of problems central banks across
The world including the federal reserve here in the united states started raising interest rates in order to get inflation down those governments whose central banks did not raise interest rates fast enough are now dealing with hyperinflation with turkey and other countries seeing inflation as high as 80 percent in order to avoid that type of hyperinflation the federal
Reserve has been very aggressive in raising interest rates now this has had the effect of slowing down the us economy unfortunately it is not yet had the effect of slowing down inflation and in fact at the last inflation report that we got for august inflation continued to increase this central bank is now committed to raising interest rates even faster in order to
Get inflation down and this has caused the world bank to warn of an economic collapse because as interest rates continue to rise this slows down the economy and the world bank is warning that the central bank here in the u.s is going to slow down the economy so much it is going to cause quote unquote devastation for the lowest income earners now we’re going to get
Into exactly what the federal reserve and the world bank had to say about all of this but first we’ve got to talk about where inflation stands today and how it continues to rise one of the things that slowed down the rate of inflation in july was a decrease in oil prices which in turn resulted in a decrease in gasoline prices this brought the overall energy sector
Down however economists did warn that if there were to be a hurricane in the gulf that could cause oil prices to rise again as oil refineries have to go offline and unfortunately hurricane fiona has now hit puerto rico and is threatening to take oil refineries off the line and cause oil prices to rise once again consumers are showing signs of uncertainty admitted
To high inflation you might recall how a prior survey of consumer confidence showed that consumers thought this economy that we’re currently in is as bad as the great depression while that sentiment has risen slightly households and business leaders remain highly uncertain about the future of the us economy and very lukewarm in their expectations that inflation
Is going to come down one of the things that’s causing consumers to be so negative about the current state of inflation is the fact that wages have not increased to keep up with inflation this is causing serious difficulties for consumers to be able to pay the rent the utility bills and their gas just to get to and from work as a result strikes are becoming more
Common as workers fight for higher wages there were 180 strikes in the first six months of 2022 increasing wages is good and will help consumers afford their bills the problem is if wages increase too fast that will actually trigger a wage growth spiral which will make inflation even worse and could lead to to inflation getting out of control and while consumer
Inflation continues to rise the inflation for u.s suppliers remains elevated as well while the rate of inflation might be falling slightly it remains much higher than it was a year ago and as u.s suppliers pay more and more for the goods that go into the products the consumers use this means u.s consumer prices will also be elevated in the months to come as these
Goods these u.s suppliers are producing hit the consumer market now the federal reserve has been raising interest rates trying to stop inflation slow it down and actually turn it around and cause deflation in order to get the economy back under control they have been raising interest rates aggressively having risen interest rates 0.75 percent at each of their last
Two meetings unfortunately this rising of interest rates has not yet slowed down inflation but it has started to slow down the us economy one area where we’ve seen a significant slowdown in the us economy has been the housing market and this is now affecting home goods retailers the cooling housing market is slowing down demand for items that people normally buy
When they buy a new house such as appliances furniture and curtains and this slow down in demand will continue to lead to worsening earnings and more layoffs which will just further slow down and push the economy deeper into recession so with the u.s economy slowing down will the fed slow down their rate of interest rate hikes unfortunately the answer is probably
Not and the fed might actually increase the rate of their interest rate hikes analysts think the fed has further to go on increasing interest rates and some analysts believe the federal funds rate will actually top out at five percent almost double where it is today because of high inflation and the threat that it might actually worsen that is causing some analysts
To argue that the fed will have to be even more aggressive with their interest rate increases than they have been in the past the august cpi or consumer price index was a blow to the idea that the worst of the inflation surge had passed the august cpi data helps solidify expectations that when the fed meets on wednesday it will lift its overnight target rate to
0.75 percentage points matching the increase in june and july the august epi data also mixed in the possibility of a full one percent point increase when the fed last gave a forecast for future rate hikes in june they had expected that the year would end at a 3.8 percent federal funds rate but over the past few weeks a number of fed officials have spoken about
Moving to at least a four percent federal funds rate and perhaps even higher now in addition to the interest rate rise that will be announced on wednesday the federal reserve will also update its year-end forecast unfortunately nobody not even the federal reserve knows how much they’re going to raise interest rates by this year fed governor christopher waller said
Looking further out i can’t tell you about the appropriate path of policy in the past the federal reserve was very clear about how much they were going to raise interest rates by unfortunately over the past few months the fed has been fairly quiet about the exact amount of rate increases especially how much they will raise interest rates by through the end of this
Year so in order to understand just how much the fed might raise interest rates by and how badly this could hurt the us economy let’s take a look at some of the exact things that fed members said over the past month all federal reserve members who have spoken so far have been uniformly hawkish meaning they are looking to increase interest rates aggressively at
Very high and very fast paces they said the fed must bring inflation down and that it could be a difficult process for the economy meaning it could push the economy into a deep recession and that’s okay if that’s what it takes to get inflation down chairman jerome powell said it is very much our view and my view that we need to act now forthrightly strongly as we
Have been doing and we need to keep at it until the job is done vice chairwoman brainerd said we are in this for as long as it takes to get inflation down vice chairman michael barr said higher rates could bring some pain in the economy but it is far worse to let inflation continue to be too high governor bowman said i supported the fomc’s decision last week to
Raise the federal funds rate another 75 basis points i also support the community’s view that ongoing increases would be appropriate at coming meetings my view is that similarly sized increases should be on the table until we see inflation declining in a consistent meaningful and lasting way governor waller said looking ahead to our next meeting i support another
Significant increase in the policy rates fed president williams said we’re going to need to have restrictive policy that is causing interest rates to be higher than inflation for some time this is not something that we’re going to do for a very short period of time and then change course and start lowering interest rates again so as you can see the federal reserve
Remains committed to aggressively raising interest rates even if it causes a recession and now the world bank is warning that the u.s economy is starting to collapse and it’s going to get worse as the fed continues to raise interest rates the world bank is warning of a global recession next year if central banks lift interest rates too high monetary policy aimed
At reducing inflation risks worsening the already current economic slowdown central bank’s efforts to tame inflation could tip the world economy into a recession next year in the u.s the federal reserve is on track to raise interest rates by at least 0.75 percentage points while central banks in england canada and the european union have all also raised interest
Rates recently if the expected rate increases fail to lower inflation monetary policy officials might raise interest rates even higher than expected which could cause a major recession global growth is slowing sharply with further slowing likely as more countries fall into recession my deep concern is that these trends will persist with long-lasting consequences
That are devastating for people in emerging markets and and developing countries despite the warning federal chairman jerome powell said that the central bank will keep raising rates to reduce inflation even if it drives unemployment higher this rattled the markets sending the stock market down over four percent in a single day so what does all of this mean for
The stock market how will the stock market respond to this information well so far it appears the stock market has been very short-sighted looking forward to the fed’s next rate hike and not much further beyond that however as fed officials continue to warn of higher rate hikes regardless of whether or not inflation comes down and as the world bank warns of a deep
Recession starting this could cause the stock market to fall even further and if we do in fact enter a deep recession in economic collapse like the world bank is warning about it will be imperative not only to have your investments in line but also to have your personal life in order as well i would strongly recommend taking this time to save as much money as
Possible and to go out and get a second job or start a side business do whatever it takes to increase your income so that you can save more money and prepare yourself for a possible layoff or severe economic downturn in the future now if you want more advice and tips on how to prepare yourself for an economic downturn make sure you hit the like button and subscribe
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Transcribed from video
US Economic Collapse Starting – World Bank Warns By Stock Curry – We Profit Day and Night
