Leverage and High-Interest Rates Will Bring About a Crisis

Economic momentum is dwindling. With this, we can anticipate decreased economic activity and potentially falling asset prices. High leverage and soaring interest rates might trigger a significant crisis, possibly worse than last March’s banking situation. Historically, the Federal Reserve’s interventions, such as reducing interest rates and implementing quantitative easing, haven’t always accurately addressed financial system challenges. Notably, in 2008, amidst evident financial strain, the Fed’s overly optimistic GDP projections missed the mark.