(Translation: Slow Cook)
Today's payroll inflation numbers are disturbing. In the December meeting the Fed increased the terminal rate target to 5.1%, up from 4.6% in just thirty days. If we keep raising the rate and then simultaneously signal still higher rates ahead, all we are doing is prolonging the pain.
Maybe soft landing really means slow cook. The frog doesn't feel the heat. Warm-blooded humans do - or at least, we will. If duration is a dimension of suffering, then the longer the pot takes to boil, the longer we will suffer.
We've been taught that the difference between a soft landing and a hard landing is the depth and duration of the recession that follows the rate hike period. Maybe soft landing is really just political speak for cowardice. Maybe a slower rise in rates merely quells revolt. They say we need a scalpel, not a hammer. I say send the wrecking ball!
Let's take the jagged pill and be done with it. If we are headed for 5.1%, then let's go there now before that, too, is insufficient.