The New American: “The Federal Reserve Bank will keep suppressing interest rates to near zero for more than a year, according to Federal Open Market Committee meeting minutes released August 20, despite talk about an “eventual normalization of the stance and conduct of monetary policy.”
According to the Federal Reserve Bank’s Open Market Committee meeting minutes of July 29-30, “Almost all participants agreed that it would be appropriate to retain the federal funds rate as the key policy rate, and they supported continuing to target a range of 25 basis points for this rate at the time of liftoff and for some time thereafter.” Twenty-five basis points is 0.25 percent, the rate at which the Fed loans to member banks. The minutes — released to the public August 20 — stated that the street expectation for the time of “liftoff” to begin raising the Federal Funds discount loan rate to member banks is the third quarter of 2015.
The Federal Reserve has been pushing off the end-date for zero interest rates for years, as a rise in interest rates would likely create another recession and spike federal government deficits (federal debt service payments are currently kept to a minimum by record-low interest rates).”
Opinion: Hold a beach ball under water for a few minutes – then let it go. That is analogous to the Federal Reserve’s money printing schemes. It doesn’t take a financial pro to predict that at some point interest rates will rise.
Some financial experts think that a rise in rates is a good thing; that it signals health in the economy and that a controlled rise would not hurt the housing and auto sales market.
Really? During the Jimmy Carter years of 1976-80 interest rates shot up to 22%. It did not get solved by money printing, but by the sound monetary policies of the Reagan years.
Declining housing and auto sales are only part of the problem. The US government pays approximately $400 billion per year in interest payment to finance its ever growing debt. Using round numbers for illustration, every 1 point rise in interest rates would add $100 million to the $400 billion deficit.
If the beach ball popped to even half (11%) of what happened in the late 1970’s, US interest payments would be $1.5 trillion or three-fourths of all revenue collected by the Federal government. Income tax rates would then have to rise quickly or the US would default on its debt.
Did somebody say Black Horse? Revelation 6:5-6.