Rising Interest Rate

[solaris]

I Think It will remain at 5%, because further increase would have a bad effect on GDP. What do you think ?

[Waypoint-Trading]

I Think It will remain at 5%


:haha: So as your borrower (the USA) gets less creditworthy every day (ie the Federal and Trade Deficits) so you don't charge higher interest rates? I want you to be my bankster!

Interest rates MUST rise to protect the dollar (if that is the intention), but the game is not to have them rise too much to stifle both growth and JSP's use of his home as an ATM.

Rates are still historically low and many would say below real inflation. The longer we go the riskier this house of cards becomes......

[Waypoint-Trading]

Weak dollar = foreign central banks will not buy new debt.



Correct, so we need to keep the dollar strong by RAISING rates. 5% might be the stopping point for political purposes, but they are going much, much higher.

[Tn...Andy]

"Trouble is, most people, even many experienced investors, don’t really understand interest rates.

First, they think interest rates are strictly decided by the Federal Reserve.

Nothing could be further from the truth. And in the months ahead, interest rates could be driven higher by powerful forces and millions of investors who are beyond the Fed’s control."

Rest of the very informative article:

http://www.financialsense.com/editorials/weiss/2006/0515.html

[Alric]

I think their going to keep raising it. It really doesn't matter if they raise it so high that we go into a depression, because even that is better than everyone dropping the dollar and having it die.

[GoldenSheikUrBootie]

The medicine that Volker gave the economy in 1979 was 18% interest rates. Bernanke will need to double that to have the same effect today. Ain't gonna happen. The USD is screwed and no one really knows about it.

$3/ gallon gas is nothing. Wait until is $5/ gallon for the screaming public's reality. Bush and Bernanke will get blamed for Greenspan's 18 years of blunder.

Maybe Jim Sinclair will be the next Fed Chairman. He could dissolve the Fed into the US Treasury and demand to have a currency backed by something tangible.