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News Report

Experts Say U.S. Inflation Has Peaked, Warns of Debt Deflation

2 mins
Updated by Paolo Besabella

In Brief

  • Jeff Booth warned that the Federal Reserve's attempt to combat inflation with continued interest hikes could lead to a "debt deflation."
  • Morgan Stanley CEO James Gorman says inflation has peaked.
  • Fed. Reserve policymakers hint at continued interest hikes.
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Famed author of “The Price of Tomorrow,” Jeff Booth, warned that the Federal Reserve’s attempt to combat inflation with continued interest hikes could lead to a “debt deflation.”

A debt deflation occurs when prices fall, and the value of currencies rises. This situation could lead to the value of debts increasing. The long-time Bitcoin proponent believes the Fed will eventually be forced to pivot to combat rising interest rates. Booth further described debt deflation as a “great depression on steroids.”

On Jan. 19, Booth tweeted that “if you could convince people that debt, and then inflation (through manipulating money) was required for a productive economy, you could amass incredible power & wealth from by stealing from them without their knowledge. Some of those people might even call you elite.”

Morgan Stanley CEO Says Inflation Has Peaked

In a CNBC interview on Jan. 19, Morgan Stanley CEO James Gorman said the US inflation had peaked and wondered if the authorities could drop it to 2%. The bank executive pointed out that the inflation numbers are better and that inflation has “clearly peaked.”

He further predicted that the Fed could increase interest rates by 25 basis points. At the peak of inflation, the Fed consistently hiked interest rates by over 50 basis points. However, the recent FOMC meeting minutes showed that the policymakers agreed to slow down the hikes in 2023.

Authorities Remained Committed

In a Jan. 19 CNBC report, Federal Reserve Governor Lael Brainard said the authorities remained committed to cutting the high inflation levels. Brainard reportedly said, “even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2% on a sustained basis.”

Separately, another top Fed policymaker Cleveland’s Fed President, Loretta Mester, hinted that they would push for more interest rate hikes despite suggestions that inflation has peaked. According to Mester, the dropping numbers prove that the hiked interest rate was having the desired effect.


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