There is no doubt that the United States is facing, and is only passing through, the door of the worst economic situation it has ever faced.Fed member Christopher Waller made it clear that demand and the job market are signaling further rate hikes to a higher level than previously expected.Well, the Fed may not have thought about it before, and the market in general hasn't, but that's exactly what we've been forecasting for the past year.My target has been firm, that the terminal rate will be in the range of 5.75% to 6.5%. And then there's even a 7.5% risk. Hang on to your hat, this rate-hike cycle may just be getting started.Christopher Waller even said the employment situation is "unsustainable." Who says that about the job market? A central banker in the midst of an inflation superstorm. Who is that?!Now, inflation on all available measures is accelerating again. For some indicators, this has been the case for at least two months.What Christopher Waller is suggesting is that with the economy maintaining its current level of activity and the job market still so strong, there is little, if any, hope that inflation will fall back to the Fed's target range. He said he already had a 50-point rate hike on his hands. We said it was a mistake for the Fed to slow the economy at the time. Although we are more likely to see a simple prolonged rate hike cycle with increments of 25. All the way to the truly sublime level.Interest rates are still low by historical standards. The backdrop is a slowing but seemingly stable economy and an overheated job market. Inflation is at historically extreme levels.Can I say it again? Interest rates are low by historical standards and inflation is high. What did people think would be the result?Think of a race car driver jumping from a suburban utility into a Ferrari? That's what the Fed is trying to do right now, somehow chasing this inflationary superstorm.Keep in mind that the other "super" is that the Fed is very worried about inflation expectations being anchored. This happens when inflation remains too high for too long. Consumers and businesses are beginning to anticipate the state of rising prices and adjust their behavior and decisions accordingly. This is the world's number one economic disaster scenario.The United States is moving in that direction.No one wants it, a concern the Fed often highlights.As a result, my once-extreme 6.5% target is increasingly widely accepted by economists, and my 7.5% risk scenario is getting closer to the center of the game board. For those of you who didn't get that last reference, we humans used to actually move real objects on an actual chessboard with our full arms. Strange, I know.All this means to the market that they are still overpriced. Property, stocks and bonds all suffered further sharp falls.Isn't this the time for weird talk about a turnaround? The bottom of this economic scenario may be unfathomable.