This happens as long-term rates rise relative to short-term rates. Though they try to hold short rates down, long rates are climbing, a trend we are already seeing. We are also seeing a weakening dollar and movements in gold. As rates rise, it starts to affect the stock market. With bonds dropping and stocks rising, the prospective returns of stocks are now low compared to bonds, translating into broader stock market pressure. This classic dynamic creates a stagflationary environment that the Federal Reserve struggles to manage. With current stagflation, the Fed wrestles with whether to tighten or ease. In an economy with vast wealth disparity, the financial impact differs drastically depending on whether you own stocks, which carries huge political implications. #Stagflation# #Macroeconomics# #FederalReserve# #StockMarket#