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Old 09-09-2016, 09:18 AM
 
721 posts, read 398,145 times
Reputation: 1079

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Why does the FED feel it needs to raise interest rates in September? I think they feel that the global recession will have another major dip down in the next year, and, unless they move interest rates up, they will not be able to lower rates when it comes time to fight the recession. Of course, I KNOW that lowering interest rates does not end a recession. We have been lowering rates for nearly two decades, and we are still in near-recession. The global economy has not recovered. Why? Because the economic growth -call it the Business Cycle if you wish -period ended in 2001. The Business Cycle won't begin again, no matter what anyone does, until DEFLATION is allowed to do it's job.

The economy is NOT recovering. If I were the President of the US I would find a FED chair with the courage to raise rates no matter what it did to stock markets and property markets. We have too much debt. We need to destroy debt in order to be able to have real economic growth. Of course the FED has been telling Americans and citizens of the world that it would protect investors. They have been protecting investors since the first bubble burst back in 2001. At that point we needed to begin discouraging debt. Growth was over. Taking out new loans when the Business Cycle had ended was a catastrophe-in-the-making. Higher interest rates protect the public from bad debt decisions, make it harder to get loans, harder to pursue loans. When there is no expansion, there should be no new loans - loans at the end of the Business Cycle are doomed to fail. But the FED decided it would just lie about things and encourage more debt and push down interest rates to encourage more loans and to eventually force people into investments in risky assets because they would have no alternative. With rates at zero, or even less than zero, cash was not an alternative. People would have to risk their savings by investing in risky assets. The FED seemed to be assuring us all that they had our back, they would not lets housing collapse, they would not lets stocks collapse. They did let oil collapse, and the commodities bubble, by raising rates, supporting the US Dollar.

Instead of raising rates in 2001, we did the opposite, we lowered rates, took on more debt, and are still taking on more debt. You can argue that debt doesn't matter, as long as it is manageable. But look where we are now. We are having to fix interest rates below zero to make our debt manageable, for the first time in human existence. This means it is NOT manageable.) If the FED decides to finally protect the Dollar - which it should have begun doing in 2001 - then we will have all those things the FED has been trying to avoid: deflation, depression, collapse of back promises, international tension, protectionism, world war, and austerity, austerity, austerity.

Strong Dollar will collapse the 'Wealth Effect' the FED has been protecting with great vigor since 2001. It will collapse the Housing Market, it will collapse the stock Markets, it will collapse the commodities Market that has been rallying since 2015, after a strong Dollar almost killed oil and gold and silver and industrial metals from 2012-2015. A strong Dollar is strong medicine. It will cure us but it also might kills us. Strong Dollar will show everyone that this so called recovery was a scam and one big lie and illusion!!!!
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Old 09-09-2016, 09:41 AM
 
Location: Oregon, formerly Texas
5,242 posts, read 3,393,710 times
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There is always another recession coming. Hard to predict precisely but they come in 7-15 year cycles. My guess is about 2020 since I don't think the economy really started improving until 2013. So 7 years after that.
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Old 09-09-2016, 09:59 AM
 
9,082 posts, read 3,697,658 times
Reputation: 13383
Quote:
Higher interest rates protect the public from bad debt decisions, make it harder to get loans, harder to pursue loans.
no, it makes it harder for "you" to get a loan because the bank will decide that you can't pay it back...

Congress needs no such "approval" beyond agreeing with itself when it passes budgets. Interest rates have no influence on US's ability to borrow money. US spending did not "drop" in the 80s because interest rates were 10+%
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Old 09-09-2016, 11:19 AM
 
17,613 posts, read 12,197,156 times
Reputation: 12846
Its more of the same from a doom and gloom poster

Last edited by Lowexpectations; 09-09-2016 at 11:30 AM..
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Old 09-09-2016, 11:21 AM
 
64,532 posts, read 66,100,109 times
Reputation: 42983
one day he will be right . so if you are going to predict ,predict often
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Old 09-09-2016, 12:45 PM
 
721 posts, read 398,145 times
Reputation: 1079
Quote:
Originally Posted by Lowexpectations View Post
Its more of the same from a doom and gloom poster
Your problem is that you can't accept the TRUTH. The entire so called economic recovery is a LIE or ILLUSION. We now have a DEBT BUBBLE of some 370%/gdp, still growing, and we are hoping, praying (pretending) that we won't need another world war, another great depression, and another generation washed out in massive personal and public austerity to get the current DEBT BUBBLE back down to 130%.

Keep praying, keep thinking positive, keep deluding yourself that debt doesn't matter, that we can just keep printing money, keep adding debt and that somehow together with low interest rates our economy is going to start organically growing again and we can all live happily ever after.

No such a thing as a free lunch. We all are going to pay a huge price for this debt insanity and orgy since 2001.
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Old 09-09-2016, 01:09 PM
 
6,996 posts, read 6,632,415 times
Reputation: 5274
Two bond investors, Gross and Gundlach, both came up with the opinion that the Fed would or might raise rates in September, even if the market odds were below 50% for a rate hike. There was also an FT article indicating that the Fed needed higher interest rates on longer-term maturities since the manipulated bond market was preventing a yield curve steepening that would have already occurred by this late stage.
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Old 09-09-2016, 01:13 PM
 
17,613 posts, read 12,197,156 times
Reputation: 12846
Quote:
Originally Posted by C2BP View Post
Your problem is that you can't accept the TRUTH. The entire so called economic recovery is a LIE or ILLUSION. We now have a DEBT BUBBLE of some 370%/gdp, still growing, and we are hoping, praying (pretending) that we won't need another world war, another great depression, and another generation washed out in massive personal and public austerity to get the current DEBT BUBBLE back down to 130%.

Keep praying, keep thinking positive, keep deluding yourself that debt doesn't matter, that we can just keep printing money, keep adding debt and that somehow together with low interest rates our economy is going to start organically growing again and we can all live happily ever after.

No such a thing as a free lunch. We all are going to pay a huge price for this debt insanity and orgy since 2001.


I don't have a problem at all. No need to worry about me bro
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Old 09-09-2016, 01:21 PM
 
Location: Metro Detroit, Michigan
11,920 posts, read 13,245,498 times
Reputation: 12652
I survived the last recession. I'm sure I'll survive the next one.

With the long hours that many companies now require of their workers, I know many people who would gladly welcome a recession. Otherwise, they wouldn't get any vacations at all.
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Old 09-09-2016, 04:27 PM
eok
 
6,684 posts, read 2,945,131 times
Reputation: 8439
People will always need real estate, no matter how poor they get. They might have to stop buying expensive cars, and even fire the maid and do their own housework. But they still need a place to live. Therefore, for an impending recession, real estate is likely to not be as bad a bet as the stock market and other investments. We're likely to end up with a lot of stagflation. Cash won't be good to hold, because of the inflation component of the stagflation. Stocks won't, because of the stagnation component. Real estate is the best compromise. As long as you don't buy it near the top of a bubble. Some places in the USA have real estate bubbles right now.

The real estate crash of 2008 wasn't really all that deep, nationwide. And it was caused by very loose mortgage credit. Now we no longer have very loose mortgage credit. So everyone should sell their stocks and buy real estate in a place that doesn't presently have a real estate bubble.
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