Welcome to hidden truths. We have today your host, Bob Barone. You have stated in your blogs that the four most dangerous words in the economics profession are THIS TIME IS DIFFERENT.

You have stated that when it comes to the economy, this time is almost never different. Yet, you have written that the current interest rates spike is different and will have surprising economic consequences. Can you talk about this today? 

Yes. This time is different. Are four dangerous words in the economics profession because the economy is huge and almost never behaves differently than it did the last time the circumstances were similar, but we think this time is different because of one thing. And that is the  📍 federal reserve. The federal reserve is acting really differently than it has in any of the past cycles. So in, in all of the past world war two tightening cycles, and there's been 14 of them,  the fed never, I repeat that never publicly announced what its intent was. There was no press statement after the meetings. There was no press conference. There was nothing called the Summary of Economic Projections or what is commonly known as the DOT PLOT. The DOT PLOT is the projections of the FOMC members as to what they think interest rates will be in the future.

And there were no press conferences.  In fact, the minutes of the Fed's meeting were never released for years now, they're released within 30 days. So all that is different. The only thing back in the past cycles that the markets knew was what the fed did. Only when the fed did it. Not that the fed told them that they were doing anything.

But  participants could look at what was going on in the market and then glean from that, what the fed had done. If we had today, that model, all the market would know was that the fed raised rates once 25 basis points and then recently 50 basis points and would probably be thinking they might be tightening, but the markets would never know that the fed wants to tighten,  from 0% fed funds rate to 3% fed funds rate. They wouldn't know that. And so that's different. How does that make a difference, Bob? So in the past, because all the markets knew that the fed was just starting to raise interest rates, they wouldn't know where the fed was going.

But today because the fed has pre-announced where they think they're going to go, the market did immediately, like within 30 days, what the fed had planned to do over a 12 to 18 month span. And so that's made the interest rate cycle occur all at once and has compacted a 12 to 18 month move in interest rates into 30 days.

And that's huge. What are the consequences of this difference? This new forward guidance policy? 

The fed has said that they want to have what is called quote on quote a "soft landing". That means we don't get a recession. Now, the fed has a very poor track record when it comes to tightening cycles and soft landings in the 14 tightening cycles in the post World War II period, 11 of them have resulted in  📍 recession.

So that makes their batting average three for 14.  What happens is when they start a tightening cycle, on average it takes about a year to 18 months for the recession to occur. So in those 11 recessions that have occurred in the post world war II period, it took between 12 and 18 months to occur. We think that because the markets have pulled forward, that the fed tightening and raised interest rates so much that timing will be compacted.

And so we think that we're going to have a recession probably beginning in 2022. It won't take a year. It'll take much shorter period of time.  This is what everybody's wondering right now.  Any evidence to date that this will actually occur. Well, the first quarter's&