Here’s what we know: Inflation is rising, growth is weakening, and the Fed is tightening. All these seem likely to persist, though to varying degrees and with occasional breaks. That means recession is coming, if not already here.

“In 1998, MIT economist Rudi Dornbusch observed that ‘none of the post-war expansions died of natural causes, they were all murdered by the Fed.’ The motive for this murder is usually to save the economy from incipient inflation by killing the economy.”

(That’s from a new research paper we will discuss today.)

As I noted last week, this will be A Weird Recession. The post-2008 expansion phase was unusually long and unusually weak. It ended not because the economy overheated but because COVID triggered the unusually deep yet brief 2020 recession.

Now we have other elements, like a war raising global food and energy prices and re-ordering geopolitical relationships, supply chains, a stressed labor market, etc. Not to mention a more dramatically inverted yield curve.

Today we’ll explore some of the factors in this recession (or whatever you want to call it). This will be a deeper dive into the issues I raised last week. We have more challenges and mysteries than I can describe in a single letter.

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