It’s all but certain the U.S Federal Reserve is going to raise interest rates. The forecast for the world economy is much foggier.

And the debate among the financial community is not, ‘Will rates go up in calendar year 2022, will they go up four times? Will they go up six times? Will they go eight times?’

The Federal Reserve would be much happier with interest rates above 3%. Right now we’re at zero. So there’s a way to go. But in order to get inflation under control, expect to see more rates that are bigger sooner. I see no reason to challenge that conventional wisdom. 

And this is the sort of thing that affects absolutely everybody from a consumer point of view.

So in the United States and uniquely in the United States, the old rules, the old guidepost of using monetary policy and interest rates still work at least for now, at least until the millennials retire in the 2050s. We’ve got time to figure this out. 

But for everyone else, the economic expansions that they experienced between the financial crisis in 2008 and the dawn of coronavirus in 2020, that was it.

That was their last economic expansion according to the rules that we understand. They don’t simply need to get by with low interest rates or high interest rates or government policy.

They need to figure out a fundamentally new way to regulate the relationships between supply and demand in a world where there just isn’t very much demand. The fallback for most of these countries was to continue to sell into the United States.

But if there’s one thing that Donald Trump and Joe Biden agree on, it’s that the days of the United States guaranteeing free trade and open markets are over. 

This is our new normal, an America that is increasingly closed to the very concept of international exchange and trade. And that takes the last big piece of global consumption, the millennials, and builds a wall around it. 

Normal monetary policy still works here. We’re going to see that this calendar year, but it doesn’t work anywhere else.