Demand Destruction: The Fed’s Favorite Party Trick

Let’s talk about “demand destruction”, which sounds like a Marvel villain’s origin story, but is actually just the Federal Reserve’s fancy way of saying “we’re going to make your life expensive enough that you stop buying stuff.”

That’s it. That’s the whole plan. No lasers, no secret lair, just interest rates, quietly turning your daily cup of coffee into a five-year financial decision.

Wait, What Even Is Demand Destruction?

In economist-speak: demand destruction happens when higher prices or higher borrowing costs cause people to buy less of something, which (in theory) cools off inflation.

On to other news…

Oil is down below $94 a barrel, Saudi Arabia may reopen their critical East to West pipeline.

There is increased economic pressure on Iran from the US, effectively shutting down their Airlines. The President is flying to NY to the US and we could have direct talks.

Graph below shows the relationship of the 2y bond to mortgage rates. Wonder what the rates are going to do? look at the 2y bond.

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