Perhaps ‘interest’ rates are so named because there is so much ‘interest’ in which direction they go.
And there is no greater interest in interest rates than in the US. In the high stakes poker game the Fed is playing with the economy, the question is will they ‘raise’ or ‘hold’?
Currency Wars author and Strategic Intelligence Strategist Jim Rickards, outlines in the essay today how the Fed have wedged themselves between a rock and a hard place.
The Fed is literally damned if they do and damned if they don’t raise rates.
This reminds me of Sir Walter Scott’s quote: ‘O, what a tangled web we weave when first we practise to deceive!’
The Fed is the master of deception — they’ve deceived generations into believing they can live beyond their means indefinitely. The Fed has facilitated this lie by creating — out of thin air — a seemingly never-ending supply of cheap credit.
They have deceived investors into thinking there is some mythical downside level in asset prices that will not be breached and if it is, they have the almighty power to reflate those values.
This lie has been lived for so long thanks to the continuous re-pricing of interest rates. As debt levels increased, the price of debt decreased.
Over the past 35-years interest rates have fallen from 18% to 0.25% The Fed has run out of rope. The truth about the global economy is gradually being revealed. The one thing liars hate is the truth.
And as Jim so eloquently points out, the time is coming when the Fed will pay the price for their deception…loss of credibility or catastrophe, choose your poison.
I await with interest for this day of reckoning.
It’s a great read. Enjoy.
Editor, Markets and Money