In the past week we have heard many rather hawkish comments from Fed officials, who are becoming increasingly alarmed at how inflationary pressures are increasing. As such they are determined to send a message to markets that they will act decisively to keep it in check. Officials indicated an aggressive path ahead, with rate rises coming at each of the remaining six meetings in 2022. One Fed president has even called to raise the rate to 3% by the end of the year. All the sudden, the Fed that has been behind the curve all the time is now awaken and wants to catch up to stay with the curve. The big question is: can you believe the Fed? Recall what happened in 2018 when the Fed was also trying to do something similar to tight up the liquidity? Then the market just gave the Fed "some color to see see" by crashing down by 20%. The Fed quickly reversed the course to bring up the market again. This time, not only the market but also the heavily debt-bound government will give the Fed some color to see see if they dare to raise the interest rate at such a fast pace! I highly doubt the Fed has the gut to seriously raise the rate as projected. Likely they are just doing lip service to show they are serious in controlling the high inflation.
Regardless of what the Fed may do, the high inflation will stay and probably go further up. In the high inflation era, what asset will perform the best? I bet most people have no idea. See below. Yes, not gold that most people would think about for hedging against inflation. It is farmland that has appreciated at an annual rate over 10% in the past 20 years!
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