The Fed’s “medicine” of lowering interest rates appears to be killing the sick American economy. The credit crunch due to unprecedented tight monetary policy has led to a surge in bankruptcy filings, portending a vicious recession and soaring unemployment. The flow of money supply (the dollars the Fed prints) fell again in October, remaining deep …
Tag: interest rates
The Defense Plans that companies will have to implement in the interest rate increases
With the… “cloud” of uncertainty over the future of interest rates looming thick, the business world is scrambling to build ramparts in order to cope with the pressure on financial costs and beyond. The messages sent by the central bankers in Europe, the UK, and the USA, with none of them categorically rejecting the possibility …
Why High Investment Grade Bonds remain the preferred choice?
Bonds and especially those characterized as high investment grade remain the preferred choice for Trust Economics. With yields trading at multi-year highs – a result of interest rate hikes by central banks – government bonds offer returns far better than any deposit account (even term deposits) while missing the risk of equity investments and commodities. …
Recession will solve the problem because anti-inflationary policies have reached their limits
Central banks insist they are not done raising interest rates yet, with inflation still well below the 2% target. The result is that the EKT is currently at the highest interest rates in its history and the FED is at the highest interest rates in 22 years. At the same time, various side effects of …
The Real-estate market in turmoil and how the EU & USA is hitting Growth
Investments in real estate are traditionally made with loans, the vast majority of which have a variable interest rate. Rising interest rates increase the cost of servicing loans and consequently reduce or eliminate the profit of the companies that own the properties. Already, internationally, the first effects are being observed, with many large companies that …
Loans: When is it beneficial to change the interest rate from floating to fixed?
The answer depends mostly on how close it is to expiration. Important factors are the rate of rise in interest rates, the margins on new loans and how much risk a borrower can bear. Since July, the ECB has raised interest rates by three percentage points, putting corresponding upward pressure on the benchmark floating rate, …
FED: Raised interest rates to 15-year highs
In a new increase in interest rates, this time by 50 basis points, the US Federal Reserve proceeded in an attempt to contain inflation that “runs” at a multiple rate of the 2% target. The Fed’s key dollar lending rate is now in the range of 4.25% to 4.50%, the highest since 2007. Federal Reserve …
The “relationship” between unemployment and inflation that traps the strategy of Central Banks
This scheme argues that what causes inflation is basically an increase in demand, that is, when there is more demand in the market for goods and services which in turn increases prices and therefore inflation. A key aspect of this pattern of increased demand is that it has to do with the ability of workers …
The Reasons That Lead the Global Economy to “Difficult Paths”
The world economy is likely to be headed for a new recession and overall a time of difficulties. Things are not so good. This has to do with the combination of a number of structural trends currently permeating the global economy. 1. Inflation is here to stay There is a more structural dimension to inflation, …
The ECB’s aggressive interest rate hike is causing problems for the EU
The ECB’s aggressive interest rate hike is causing problems for everyone in Europe. To citizens who are asked to pay a higher installment on their mortgage or consumer loan, to businesses that are raising the cost of servicing their loans, to states that see their existing bonds collapse, and even to public debt that, instead …