If CPI goes negative while the Fed is above the zero lower bound, real interest rates will go positive because real rates equal the benchmark rate minus CPI, which mathematically creates a situation where monetary stimulus paradoxically becomes contractionary.
factualpending
Speaker
DanielleEvidence Quote
“yes yes it actually can mathematically happen it's perfectly conceivable and when you see negative eight point seven on retail sales [33:46]”
Source
Danielle DiMartino Booth: "Recession Coming? The Fed’s Endgame" (Hedgeye Investing Summit)— HedgeyeCreated: 8/11/2026, 12:48:35 AM
My Notes
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