Financial markets live in terror of the day the Federal Reserve raises interest rates. However, we should fear exactly the opposite: a persistent nightmare of low interest rates. Chronically low interest rates signal trouble, and they inflict financial pain. Ominously, a recent economic poll (interpreted correctly) suggests that interest rates are going to fall, not rise.
|© Terry Burnham|
The Fed has been keeping interest rates at rock bottom lows to supposedly stimulate the economy… The idea that the Fed can save the economy is simply ridiculous. … What about fiscal policy? Can we deficit spend our way to prosperity? This is also ridiculous. Our problem is that we have overspent. If you had a problem of drinking 50 cups of coffee a day, would the solution be to drink 80 cups a day for a while? …
Stocks will decline … I’m not predicting what will happen today, or in the next week or month. I don’t pretend to know the timing. I only think that I see the inevitable.One year later, we revisit the macroeconomic policies and the impact on jobs and profits, and check in on the Dow Jones Industrial Average. In addition, we develop a scorecard to revisit periodically as the government attempts to end the unusual macroeconomic policy environment.