How far do you think they can take it John what's happened really what's Happened for 30 years i've been hearing That central banks their biggest problem Was fighting disinflation nobody knew How to do it but if inflation ever came Back and we had high inflation we had The road map we had the blueprints we Knew how to do it well here it is and What i'm hearing from priya is that We're too frightened of actually doing What's necessary to put the inflation Genie back in the bottle to hike rates Dramatically Raise the cost of financing so that These higher prices can't be supported Yes it could lead to recession but at Least you put the inflation genie back In the bottle i guess in the end i see Both on the fiscal on the monetary side No appetite to do that so yeah i don't See a terminal rate getting much above Two and a half to three percent bob you Just said something really interesting Now use the word frightened as if They're scared of it and then you used The word recession That might and implied that maybe a Recession would be worth putting the Inflation genie back in the bottle I want to build on that bob why do you Think that's a fair exchange Because The difference between today and when
Volcker was running the fed and raise Rates from 5 To 20 percent in five years is that the Central banks have become dependent on Financial conditions indicators so they Look at people like us And if we throw our rattles out of the Pram Then they get panic stricken that that Could lead to recession because that's What their model tells them and they Back off and i think that's how we've Gotten into the position we're in today
