Things can get this bad if we get a systemic event that plunges the world economy into a deep recession/stagflation that outrivals GFC due to the highest debt levels and everything bubble. I doubt rates can go that high before we get a recession that will force the Fed’s hand to cut rates and abandon QT. When people say we won’t get GFC 2.0 because we are in a better place than then, it is half truth; in fact the underlying pre conditions are there and much worse , it’s just that central bankers are better prepared because they have encountered it before and know what to do and what not to do. But they are not in control of the catalysts that can trigger the avalanche or tsunami, so far we have been lucky but even cat with nine lives can’t push their luck. While GFC 2.0 or Big Kahuna 2.0 may be just a major event away, it could also be averted altogether. So nothing is assured except we have to keep an open mind that it can be a hairs breadth away. Precarious and fragile it will be be and 2023 will continue to test and challenge these fragilities and vulnerabilities. Everyone have had enough time to prepare, don’t say you haven’t been alerted.
