Interest rates

[errolanderson]

How much longer can an artificially stimulated economy taped together by money printing, easy credit and astronomical gov’t and consumer debt hold? Now the Fed is attempting to unwind their mind-blowing $4.5 trillion balance sheet which will trigger massive bond sales.

Should the U.S. economy enter recession / bond markets fail, there will be no more talk about Fed rate hikes or inflation. Today’s Fed comments may just a distant memory when this economic realignment impacts markets en-mass.

Central bankers are losing control and now powerless to stop a correction in-my-view . . . .

[farmaholic]

Can you money market watching guys explain why what happened in the eighties happened. Stoopid high interest rates. I was kinda young or not interested. Can or will it happen again?

[tmyrfield]

Can you money market watching guys explain why what happened in the eighties happened. Stoopid high interest rates. I was kinda young or not interested. Can or will it happen again?

recesion
deficit financing to stimulate economy
inflation
high interest rates to battle inflation
more recesion
more deficits
more inflation
higher interest rates

[errolanderson]

Can you money market watching guys explain why what happened in the eighties happened. Stoopid high interest rates. I was kinda young or not interested. Can or will it happen again?

President Regan's public debt was less than 1% of today's U.S. debt accelerating above $21 trillion. In Regan era, money printing did work and could work an economy out of a recession. Keynesian economics worked in those days.

Today, this doesn't work anymore because of the massive government debt and service charges. Service charges today alone are well above the total public debt of the 1980's. A totally different world. Today's QE (IMO) has simply created unsustainable asset bubbles.

Inflation was rampant in the early 80's. Mortgage rates soared as high as 22% at its peak. But debt wasn't an issue. Inflation was the issue. Now public debt is massive and uncontrolled. Just a small rate hike can do serious damage to gov't /consumer balance sheets.

The Fed raising rates now is also accelerating their service charges on an already accelerating debt load. But they do need room to cut rates when the next financial crisis hits. When that happens, QE4 may be born . . .

[farmaholic]

Thanks guys....

So, what's the answer?

Crash?

The economy will fix itself(sound familiar)?

What type of medicine needs to be taken, or any?.....let it trod along?

If policy, interference and manipulation got us to this point, what's needed to correct it, if you think anything is wrong.

Inflation can go away, debt doesn't.

Maybe controlling debt early would have been less painful than "some" inflation.

What would things look like today if things would have been left to their own devices?

I hate the thought of "forcing" an economy.

Lots to comment on if anyone cares to, THANKS again guys.

A fool can ask more questions than a wise man can answer

[biglentil]

The dollar is doing really well! Average life span of fiat currency is 27 years this experiment is now on year 47. There has only been 3400 different failed fiat currencies in history maybe this one will last. Its different this time.

[farmaholic]

Seems we have both inflation and the debt now. Hidden inflation, where packaging sells you less for more money.

Maybe the everyday consumer items aren't too bad but some stuff seems nuts.

Best to keep the everyday consumer goods reasonable to keep the masses satisfied.

Inflation has taken it's toll on the things I need to buy to farm with. House prices are crazy. Vehicles probably gained back the price they lost after 08.

[errolanderson]

Thanks guys....

So, what's the answer?

Crash?

The economy will fix itself(sound familiar)?

What type of medicine needs to be taken, or any?.....let it trod along?

If policy, interference and manipulation got us to this point, what's needed to correct it, if you think anything is wrong.

Inflation can go away, debt doesn't.

Maybe controlling debt early would have been less painful than "some" inflation.

What would things look like today if things would have been left to their own devices?

I hate the thought of "forcing" an economy.

Lots to comment on if anyone cares to, THANKS again guys
A fool can ask more questions than a wise man can answer

farmaholic, you are no fool . . . .

This situation has just now begun to upset markets as the consequences of central bank decisions of simply kicking-the can have now turned into an economic monster that central bankers are no-longer able to manipulate. It will impact all of us.

The consequences of debt has yet to be fully felt (IMO). Retail is in-the-crosshairs. The next generation may have a totally different view on consumerism and debt. Equity markets will be impacted. But there will be tremendous opportunity for those positioned for the change in markets consumer attitudes. A changing-of-the quard so-to-speak lies ahead.