Unlike 2022, when stimulus savings allowed consumers to absorb price hikes, the financially depleted middle class now lacks the ability to pay more. This forces them to push back on price increases, creating significant consumer resistance that acts as a powerful, albeit painful, check on a new round of inflation from tariffs or other cost pressures.

When the prevailing narrative, supported by Fed actions, is that the economy will 'run hot,' it becomes a self-fulfilling prophecy. Consumers and institutions alter their behavior by borrowing more and buying hard assets, which in turn fuels actual inflation.

Money printing is a politically expedient way to provide voters with the illusion of "free" services. It allows governments to spend without immediate, visible taxation, playing directly into the human tendency to prioritize short-term ease over long-term consequences.

Official inflation metrics (rate of change) are meaningless to the public. People feel the pain of absolute price levels versus their stagnant wages, creating a disconnect that fuels widespread economic apathy and anger, regardless of what government data says.

The current economic cycle is unlikely to end in a classic nominal slowdown where everyone loses their jobs. Instead, the terminal risk is a resurgence of high inflation, which would prevent the Federal Reserve from providing stimulus and could trigger a 2022-style market downturn.

The Federal Reserve can tolerate inflation running above its 2% target as long as long-term inflation expectations remain anchored. This is the critical variable that gives them policy flexibility. The market's belief in the Fed's long-term credibility is what matters most.

While the direct impact of tariffs may be temporary, the elongated process risks making consumers and businesses comfortable with higher inflation. Combined with questions about the Federal Reserve's political independence, this could unmoor expectations and make inflation persistent.

Official inflation metrics may be low, but public perception remains negative because wages haven't kept pace with the *cumulative* price increases since the pandemic. Consumers feel a "permanent price increase" on essential goods like groceries, making them feel poorer even if the rate of new inflation has slowed.

While a single tariff hike is a one-time price shock, a policy of constantly changing tariffs can become a persistent inflationary force. The unpredictability de-anchors inflation expectations, as businesses and consumers begin to anticipate a continuous series of price jumps, leading them to adjust wages and prices upwards in a self-reinforcing cycle.