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If so, not only will it stifle Bannon's plans to rebuild infrastructure using low interest rates, but it will likely crash the stock market and cause the housing market to implode. It will also cause havoc among banks that are exposed to interest rate swaps.
Worse, it will be even more difficult for struggling tight oil producers to refinance their debt, which will lead to even more bankruptcies, which could lead to an "oil shock," as demand begins to exceed supply. Current bond holders will also want to get out from under their positions, which will cause a sell off in the bond market.
Additionally, the US dollar will be stronger, which will make it more difficult for US companies to sell their exports.
All of this does not bode well for the US economy.
They kept interest rates at nearly 0% to prop up Obama's "recovery'.
I bet they raise rates to hurt Trump because he wasn't their choice.
I have no real doubt that that they will do what they can to stifle the economy to send the message to the people that they need to be obeyed, and their candidates must be elected.
We can hope they do. We really should be up in the 6-8% range.
Remember, higher interest rates means those who save, those who are responsible with their money can actually make money off such. This promotes good responsible habits.
Low interest rates promotes "minimum payment" buying habits because everyone stops thinking about the value of the product and only cares about the loan payment. This ends up with irresponsible buying habits, overvalued goods, discourages saving and penalizes responsible money handling which eventually leads to many bubbles, inflation, recessions and depressions.
They kept interest rates at nearly 0% to prop up Obama's "recovery'.
I bet they raise rates to hurt Trump because he wasn't their choice.
It will only hurt for a year or two though. Same with Regan, interest rates shot up balance out the progressive policies and irresponsible management of Carter. The first two years of his term were tough, but after that the market righted itself and started getting better.
We can hope they do. We really should be up in the 6-8% range.
Remember, higher interest rates means those who save, those who are responsible with their money can actually make money off such. This promotes good responsible habits.
Low interest rates promotes "minimum payment" buying habits because everyone stops thinking about the value of the product and only cares about the loan payment. This ends up with irresponsible buying habits, overvalued goods, discourages saving and penalizes responsible money handling which eventually leads to many bubbles, inflation, recessions and depressions.
I agree that low interest rates have created an artificial and unsustainable economy, but raising interest rates will be incredibly painful. It will appreciate the US dollar and crash some asset markets. It will also lower the price of oil, which will put even more stress on tight oil producers, increasing the chances of an "oil shock."
Furthermore, it will likely cause a global banking crises due to derivative risk exposure on debt.
I agree that low interest rates have created an artificial and unsustainable economy, but raising interest rates will be incredibly painful. It will appreciate the US dollar and crash all asset markets. It will also lower the price of oil, which will put even more stress on tight oil producers, increasing the chances of an "oil shock."
Furthermore, it will likely cause a global banking crises due to derivative risk exposure on debt.
Yes, it will be painful, but it is the only answer (and we did it in the Regan years which led to some major prosperity after). Some people are going to have to take the hit, some are going to lose their arse, some are going to bankrupt, this MUST happen or there is no point in all of it as to say this should go on or that we should excuse it is to say reality and consequence do not exist and they absolutely do, we WILL pay for it one way or another, but at least this way, the irresponsible will take the biggest hit.
Remember though, while there will be losers in this, there will also be winners. As I said though, this will put more of the power back into the hands of the individuals who have been responsible. The rest are going to have a very very hard time.
An increase of 25 basis points is already baked into markets.
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