Doesn't Sharia law prohibit charging interest?
I think the Fed is being forced to ‘hint’ in public that the jobless numbers are all smoke and mirrors.
Market rates will push interest on the debt to over $1 trillion/year. This president will not permit that reality. It would scotch his plans for unlimited government spending.
I’ve read many times about “the excesses of cheap credit in the 80’s.” They’re all written, of course, to make Reaganomics look like a fake boom (My parents were making nearly 100,000/year in the 80’s when a new car cost around 10,000, gas was 65 cents, we had manufacturing jobs, and a new house was 50,000). Anyway, I wonder if the same libtard ‘economists’ (those who just regurgitate Paul Krugman) will issue the same fulminations about Obamanomics. No, I don’t wonder that because I know they won’t.
Can’t see how Fed can ever raise rates again.
as an economics major, I recall learning that the “natural” interest rate over time is something like 4 to 6pct.
as a 64 year old, I recall mortgage rates 16 percent plus in the early 80’s. We re-negotiated our home mortgage once or twice when the rates fell from 10 to 8 and so on.
People (generally) under 50 do not recall rates like that. Any change in rates will be a huge shock to most. Imagine some millennial applying for a car loan and being told that interest is not “free” but 6pct? Can you hear the sound of economic brakes screeching???
The long term, artificial suppressing of interest rates is, to me, the greatest threat to the economy out of many economic threats out there these days.
Don’t look for a Fed rate hike this century.
The yield curve is a very good indicator of things to come.
An inverted yield curve is when long bonds are yielding/paying less than shorter term bonds.
These are market driven rates, all except the overnight rate that is set by the FED.
The question is why would anyone buy a 30yr bond that pays less than what they could earn overnight?
Answer: Because those short term rates are likely to drop, (reinvestment risk)and they need to capture what they can while they can.
People need to know that the Bond Market is substantially bigger than the Equities market. The Bond market is where the so-called “Safe Money” is invested.
The spread between short and long bonds has compressed as the safe money is still looking for a home.
It’s not likely to actually “Invert” with FED funds (overnight) at 25 basis points, but may invert between the 7yr and 30yr.
We are in somewhat uncharted territory.
I contend that if the yield curve inverts between the 5-7yr and 30yr bonds, and stays inverted for a number of months, than we are in for a whole lot of trouble.
To put this in perspective and in some historical context, I recommend this website.
http://stockcharts.com/freecharts/yieldcurve.php
Dynamic Yield Curve
They have data back to 1999 that compares, side by side, the S&P to the yield curve.
Just click on the S&P chart to set the “start time” and hit animate.
I cannot believe so many Wall Street “experts” fell for this interest rate Kabuki. Plain and simple, the Fed cannot raise interest rates. Okay, 25 basis points, at most, but that’s it.
The dollar will fall one way or the other. Sometime after the rate is increased, it will fall like a rock (see bonds, debts, activity, stocks, unemployment, etc.: vicious circle).