Will the Fed hike rates? Should it?

[OROBTC]

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I have no idea if the Federal Reserve will raise sort-term rates in the coming week.  We will know by Tuesday afternoon (US ET) I believe.  Eventually, rates do have to go up.  ZIRP is not a solution for long.

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I contend that positive real interest rates in general are a good thing.  Without positive rates, investors will not invest for the long-term.  They will speculate, especially re asset prices (stocks, bonds and real estate).

Even w/ ZIRP, who is building factories here in the USA?  Of course some are, but not many.

Pensions and retirees want positive interest rates.

As do I.

What say you all?  Stake your claims, make your cases...



Disclosure: sold my stocks and long-term bonds recently

[yayayo]

I think the FED will hike the rates to avoid loosing credibility only to lower them again after a few months.

The so-called "recovery" is bogus, based on manipulated statistics and the perception of healthy (= rising) stock markets. Hiking the rates will lead to a stock market crash that will in turn worsen psychological indicators and (to a degree) the real economy.

I'm not only sure that the FED will lower the rates again, I'm also sure, that we will see another round of Quantitative Easing (= monetary inflation).

ya.ya.yo!

[oblivi]

We are headed towards negative rates and eventual QE4. I wonder how many QE installations can they go on for until the system goes pop. So far it seems to work. AS long as people keep accepting dollar worldwide, I dont see how the system will crash because at the end of the day what matters is people accepting the money as valid or not, even if the root of the creation of the money is scammy, it seems people dont care as long as it buys you things.

[spazzdla]

Rates will NEVER pass 1% as long as the USD exists, ever ever ever.

NEVER again will there be an interest rate of 1% until the USD completely collapses and probably most fiat currencies with it.

[spazzdla]

We are headed towards negative rates and eventual QE4. I wonder how many QE installations can they go on for until the system goes pop. So far it seems to work. AS long as people keep accepting dollar worldwide, I dont see how the system will crash because at the end of the day what matters is people accepting the money as valid or not, even if the root of the creation of the money is scammy, it seems people dont care as long as it buys you things.

China will probably bring them to an end.  Martin Armstrong seems to have a very good time line for this.

[Itun]

It's pretty clear that the Fed will raise the rates. The question is when and by how much (probably not by much at all).

I agree with your viewpoint on positive real interest.

It's healthy to have a bit of a raise in interest rates.

[jaysabi]

My prediction is the rate will not be hiked this time. China is slashing rates because of weakness, which will probably unsettle the Fed a bit as it suggests we may be close to another global recession. I expect this to lengthen the runway before rate hikes are enacted.

[AtheistAKASaneBrain]

We'll probably be at QE10, the return of the QE, and still be wondering how the dollar hasn't collapsed yet. Im starting to believe the dollar can hyper inflate forever and still function as long as people accept it as money.

[Itun]

We'll probably be at QE10, the return of the QE, and still be wondering how the dollar hasn't collapsed yet. Im starting to believe the dollar can hyper inflate forever and still function as long as people accept it as money.

I agree but that's just about what we have right now

Until there is a widely accepted, revolutionary new standard *cough cough*, people are going to have to rely on this dollar..

[GrungierBoss]

Building trust = NP

Fuck it up = P

If people lose the trust in The Dollar, it will go fast.

[Itun]

Building trust = NP

Fuck it up = P

If people lose the trust in The Dollar, it will go fast.

Well, to my knowledge, there is no currency out there right now that is financially backed by gold, etc.

They're all trust systems, as Bitcoin is

[GrungierBoss]

True, bitcoin got $varPower to back it though.

[Barnabe]

Russia was buying gold a few months ago probably in order to have a less variable currency.

[RealBitcoin]

No i think it wont, because that would crash the whole system.


1) If they raise rates, then the stock and bond market crashes, and all that printed money will flow into the economy causing hyperinflation.

2) If they dont, then they will have to print more money to pump up the stock market, which will also cause hyperinflation eventally (but later).


So they will probably go with 2), delay it as much as possible.

[Kprawn]

There is no quick fix for the US fiat situation. People should make less debt and the government should print less money. Period.

Foreign investors should have enough incentive to invest and interest rates should be low enough to enable this. I would much rather see a steady increase in small increments

in the rates, than one big chunk in one go. The stock markets are to unstable to take big knocks, like they did when China tried to "de-bubble" their stock market.

[spazzdla]

We are headed towards negative rates and eventual QE4. I wonder how many QE installations can they go on for until the system goes pop. So far it seems to work. AS long as people keep accepting dollar worldwide, I dont see how the system will crash because at the end of the day what matters is people accepting the money as valid or not, even if the root of the creation of the money is scammy, it seems people dont care as long as it buys you things.

Yup, I honestly forsee -5% to -10% as the norm.  People will be dumbfounded that one had to pay for a loan and doesn't get paid to take one out.  The system will be adjusted so this money is legit just printed out of thin air to pay people to take on loans.  It's going to be a race to who can take on the most debt....

You will be allowed to take x amount depending on your income and how long you have been holding $.  The longer you hold and prevent it from hitting the market the more you make on them paying you out of thin air.  The stockmarket will boom as everyone will just be taking on bigger and bigger loans as they get paid too. All assets should sky rocket during this time.

[wxa7115]

We'll probably be at QE10, the return of the QE, and still be wondering how the dollar hasn't collapsed yet. Im starting to believe the dollar can hyper inflate forever and still function as long as people accept it as money.

This is something that I have been thinking as well, I really don’t think that the dollar is going to collapse anytime soon, of course I could be mistaken, but the population seems oblivious and keeps accepting dollars.

[Possum577]

I contend that positive real interest rates in general are a good thing.  Without positive rates, investors will not invest for the long-term.  They will speculate, especially re asset prices (stocks, bonds and real estate).

Invest in what, exactly, for the long term?

Plenty of people are investing in stocks for the long term, hence the steady growth over the last few years.

I don't think the Fed will raise rates this week, only because China devalued it's currency recently (that's the only reason). What's good is that people have been anticipating a rate hike for so long that it's likely already priced into the current levels. There would be a small movement but not a crash.

[futurebit640]

My prediction is the rate will not be hiked this time. China is slashing rates because of weakness, which will probably unsettle the Fed a bit as it suggests we may be close to another global recession. I expect this to lengthen the runway before rate hikes are enacted.

But some analysts are suggesting to increase the rates because they think china slow down is not a big concern and I think other major issue currently is every where the refugees accepting issue. But as of now situation is much better than few years ago but not stable yet to increase the prices. Lets see what they do?

[roadbits]

My prediction is the rate will not be hiked this time. China is slashing rates because of weakness, which will probably unsettle the Fed a bit as it suggests we may be close to another global recession. I expect this to lengthen the runway before rate hikes are enacted.

But some analysts are suggesting to increase the rates because they think china slow down is not a big concern and I think other major issue currently is every where the refugees accepting issue. But as of now situation is much better than few years ago but not stable yet to increase the prices. Lets see what they do?

These speculations are there for quite some time but most of the investors thinking fed will increase this time but not sure what happens because world economy is still not in a good shape. Still there are so many issues with world currencies falling except USD, china going down and Europe is still unstable...