"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@derryb said:
Normally, yes. Times/markets are not normal. Thank your FED for throwing fundamentals out of the window.
If it was my FED then the Fed funds rate would be 4% and the economy would be booming. The $15 Trillion sitting in savings, CDs and money markets would generate $600 billion in interest income for J6P that could be spent on cars, restaurants, clothing, gold, and myriad other things including tax receipts for governments. ZIRP does just the opposite and helps no one.
I certainly am no expert in these matters... and perhaps the economy would in fact be booming. But a thought that is nagging me is... but what would be the impact on the housing market, the cost to the government for those collecting social security or disability (tied to to cost of living, influenced by interest rates), all the other governmental debt, those who need to borrow to purchase a car or other necessities, cost of attending college, etc.?
I certainly do not know the answers... ...but it would be nice to have more interest income to be able to buy gold and coins!
Wish I had a time machine and go back to year 2000. 100 ounce Silver bars selling for $400. One ounce Gold for $300. In the meantime, enjoy a strong dollar if you travel world wide alot.
Cheers
If it was my FED then the Fed funds rate would be 4% and the economy would be booming.
If the Fed funds rate were 4%, what do you think would be happening to the bond market and the government's ability to finance the $trillions of debt load?
Q: Are You Printing Money? Bernanke: Not Literally
@jmski52 said: If it was my FED then the Fed funds rate would be 4% and the economy would be booming.
If the Fed funds rate were 4%, what do you think would be happening to the bond market and the government's ability to finance the $trillions of debt load?
The interest paid on the currently outstanding 22 tillion would not change.
The trillion dollar deficit would carry an interest rate of 4%, up from the current 1.5%. This would result in increased interest payments of $25 billion--about the same as farmer subsidies.
There 15 trillion sitting in savings and money markets and cd would generate $600 billion in income and result in additional taxes paid of at least $70 billion. Mo' money for the govt. The remaining $500 billion could get pumped into the economy.
Pensions would be able to invest at 4% helping to ensure longevity and stability.
The bond market would see prices on existing debt drop, which is meaningless as the bonds would be held to maturity anyway.
Real estate prices would be capped- at least temporarily- which would help afforability. Remember, folks still bought houses in 1980 with 15% mortgages. They can handle 6% easily.
Thanks for taking the time to formulate your answers.
Not being a bond expert or an expert in government finance, I'll take a stab at it anyway.
As I recall, when the Fed attempted to bump rates slightly a few months ago, the stock market had a convulsion and the Fed quickly had to reverse their strategy 180 degrees. Imagine what the reaction will be when rates actually DO rise.
From what I'm reading, the current liquidity squeeze is a year-end phenomenon, but it has morphed into an effort to save the hedge funds and pension funds via "not QE" - a euphemism otherwise recognized as QE4. The Fed loses credibility every time they try to couch what they are doing in mealy-mouthed terms that don't mean anything.
Knowing what we know about derivatives, the NEW MONEY is obviously going to the best friends of the Fed as another bailout for the banks and hedge funds. One question I've come across posed by Martino-Booth is "how can the public pension funds be so underfunded in the wake of this historic stock market? What gives?
Anyone, (and that means everyone including pension funds) who has invested in bonds would take a massive hit to their balance sheets if and when interest rates go from 1 1/2% to 4%. Is that not the case? How is it that you would consider such a drop to be "meaningless"? Another bailout?
You say that real estate prices would be capped. I see a real possibility that real estate will take a major hit if rates go from 1 1/2% to 4%. Do you think that the Fed or the politicians in DC will be thrilled about that? Also, what do you think is going to happen when that paper wealth in real estate vanishes overnight? Not a good scenario for investing in real estate, stocks or bonds.
I think that the Fed is playing games as usual and that the money will continue to be debased, at a faster rate. I think that this time around, the debt will have to be monetized in a big way. Maybe I'm completely out of it, but tell me how I'm wrong.
Q: Are You Printing Money? Bernanke: Not Literally
@jmski52 said: What do you see as a negative of 4% rates?
Thanks for taking the time to formulate your answers.
Not being a bond expert or an expert in government finance, I'll take a stab at it anyway.
As I recall, when the Fed attempted to bump rates slightly a few months ago, the stock market had a convulsion and the Fed quickly had to reverse their strategy 180 degrees. Imagine what the reaction will be when rates actually DO rise.
Well, no. The Fed had been increasing rates for the previous 2 years and stock market had risen over 50% (just as someone said it would if the Fed raised rates ). So a dearth of buyers and a volatile President can easily explain a market drop.
From what I'm reading, the current liquidity squeeze is a year-end phenomenon, but it has morphed into an effort to save the hedge funds and pension funds via "not QE" - a euphemism otherwise recognized as QE4. The Fed loses credibility every time they try to couch what they are doing in mealy-mouthed terms that don't mean anything.
Me think you read too much tabloid news.
Knowing what we know about derivatives, the NEW MONEY is obviously going to the best friends of the Fed as another bailout for the banks and hedge funds. One question I've come across posed by Martino-Booth is "how can the public pension funds be so underfunded in the wake of this historic stock market? What gives?
All liabilities are underfunded by definition. Public pensions, especially, can make several corrective measures.
Anyone, (and that means everyone including pension funds) who has invested in bonds would take a massive hit to their balance sheets if and when interest rates go from 1 1/2% to 4%. Is that not the case? How is it that you would consider such a drop to be "meaningless"? Another bailout?
A drop in bond prices is merely an accounting issue. These bonds would continue to pay just as they had before. The income they generate would not change so therefore no impact on ability to meet obligations.
You say that real estate prices would be capped. I see a real possibility that real estate will take a major hit if rates go from 1 1/2% to 4%. Do you think that the Fed or the politicians in DC will be thrilled about that? Also, what do you think is going to happen when that paper wealth in real estate vanishes overnight? Not a good scenario for investing in real estate, stocks or bonds.
Wont take a major hit. Houses are still largely affordable and the largest demographic is entering family formation years. Lots of demand out there.
I think that the Fed is playing games as usual and that the money will continue to be debased, at a faster rate. I think that this time around, the debt will have to be monetized in a big way. Maybe I'm completely out of it, but tell me how I'm wrong.
Maybe. Stay diversified, but dont fret. World aint gonna end, nor is the USA.
It's doubtful that gold will retrace it's yearly high from September before 12/31....Needs to gain approx $35 in the next 2 days. Take your Internet swamis, radical websites or online self proclaimed PM guru's dire warnings or predictions with a grain of salt.
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
@OPA said:
It's doubtful that gold will retrace it's yearly high from September before 12/31....Needs to gain approx $35 in the next 2 days. Take your Internet swamis, radical websites or online self proclaimed PM guru's dire warnings or predictions with a grain of salt.
Agree. Most investors are putting their money in the stock market to take advantage of this bull market. It'll be interesting to see how the PM markets do when there's a major downward correction in the stock market which is over due.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Comments
After years of losing court battles the FED had to finally make public the details of it's $29 Trillion bailout.
Short Summary
And, the dirty details
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I certainly am no expert in these matters... and perhaps the economy would in fact be booming. But a thought that is nagging me is... but what would be the impact on the housing market, the cost to the government for those collecting social security or disability (tied to to cost of living, influenced by interest rates), all the other governmental debt, those who need to borrow to purchase a car or other necessities, cost of attending college, etc.?
I certainly do not know the answers... ...but it would be nice to have more interest income to be able to buy gold and coins!
Where is that roller coaster video.
Forget about $2,000 gold by e/o year. Ain't gonna happen.
This keeps up, we may be luck to see $1500
Wishful thinking, me thinks.
not much time left
Wish I had a time machine and go back to year 2000. 100 ounce Silver bars selling for $400. One ounce Gold for $300. In the meantime, enjoy a strong dollar if you travel world wide alot.
Cheers
100% Positive BST transactions
BTW Thanks for posting the charts!
100% Positive BST transactions
If it was my FED then the Fed funds rate would be 4% and the economy would be booming.
If the Fed funds rate were 4%, what do you think would be happening to the bond market and the government's ability to finance the $trillions of debt load?
I knew it would happen.
The interest paid on the currently outstanding 22 tillion would not change.
The trillion dollar deficit would carry an interest rate of 4%, up from the current 1.5%. This would result in increased interest payments of $25 billion--about the same as farmer subsidies.
There 15 trillion sitting in savings and money markets and cd would generate $600 billion in income and result in additional taxes paid of at least $70 billion. Mo' money for the govt. The remaining $500 billion could get pumped into the economy.
Pensions would be able to invest at 4% helping to ensure longevity and stability.
The bond market would see prices on existing debt drop, which is meaningless as the bonds would be held to maturity anyway.
Real estate prices would be capped- at least temporarily- which would help afforability. Remember, folks still bought houses in 1980 with 15% mortgages. They can handle 6% easily.
What do you see as a negative of 4% rates?
Knowledge is the enemy of fear
Agree
What do you see as a negative of 4% rates?
Thanks for taking the time to formulate your answers.
Not being a bond expert or an expert in government finance, I'll take a stab at it anyway.
As I recall, when the Fed attempted to bump rates slightly a few months ago, the stock market had a convulsion and the Fed quickly had to reverse their strategy 180 degrees. Imagine what the reaction will be when rates actually DO rise.
From what I'm reading, the current liquidity squeeze is a year-end phenomenon, but it has morphed into an effort to save the hedge funds and pension funds via "not QE" - a euphemism otherwise recognized as QE4. The Fed loses credibility every time they try to couch what they are doing in mealy-mouthed terms that don't mean anything.
Knowing what we know about derivatives, the NEW MONEY is obviously going to the best friends of the Fed as another bailout for the banks and hedge funds. One question I've come across posed by Martino-Booth is "how can the public pension funds be so underfunded in the wake of this historic stock market? What gives?
Anyone, (and that means everyone including pension funds) who has invested in bonds would take a massive hit to their balance sheets if and when interest rates go from 1 1/2% to 4%. Is that not the case? How is it that you would consider such a drop to be "meaningless"? Another bailout?
You say that real estate prices would be capped. I see a real possibility that real estate will take a major hit if rates go from 1 1/2% to 4%. Do you think that the Fed or the politicians in DC will be thrilled about that? Also, what do you think is going to happen when that paper wealth in real estate vanishes overnight? Not a good scenario for investing in real estate, stocks or bonds.
I think that the Fed is playing games as usual and that the money will continue to be debased, at a faster rate. I think that this time around, the debt will have to be monetized in a big way. Maybe I'm completely out of it, but tell me how I'm wrong.
I knew it would happen.
Well, no. The Fed had been increasing rates for the previous 2 years and stock market had risen over 50% (just as someone said it would if the Fed raised rates
). So a dearth of buyers and a volatile President can easily explain a market drop.
Me think you read too much tabloid news.
All liabilities are underfunded by definition. Public pensions, especially, can make several corrective measures.
A drop in bond prices is merely an accounting issue. These bonds would continue to pay just as they had before. The income they generate would not change so therefore no impact on ability to meet obligations.
Wont take a major hit. Houses are still largely affordable and the largest demographic is entering family formation years. Lots of demand out there.
Maybe. Stay diversified, but dont fret. World aint gonna end, nor is the USA.
Knowledge is the enemy of fear
Let's roast Roche!!! String him up by his heels!! Another prognosticator bites the dust!!
bob
It looks like palladium won this race, I see a high North of 2k in the last 24hrs...
It's all about what the people want...
That didn’t last long
It's doubtful that gold will retrace it's yearly high from September before 12/31....Needs to gain approx $35 in the next 2 days. Take your Internet swamis, radical websites or online self proclaimed PM guru's dire warnings or predictions with a grain of salt.
Agree. Most investors are putting their money in the stock market to take advantage of this bull market. It'll be interesting to see how the PM markets do when there's a major downward correction in the stock market which is over due.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Finally, my first spouse coins will be worth something