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Fed Raises Interest Rates for the First Time in a Decade
There has only been one thing keeping our economy afloat since the crash of 2008. That is, cheap money provided by the Federal Reserve. Everything from stocks to bonds and even real estate, have been pumped up by the Fed’s limitless money supply.
And the Fed isn’t alone. Central banks all over the world have been utilizing the same strategy of inflating their currency, and provided near zero interest rates. That’s because everybody wants stay competitive by keeping their exports cheap. They’ve been racing to the bottom for years, but now it appears that the bottom has finally been reached.
Today Janet Yellen announced that the Fed would raise interest rates by a paltry .25%, in the hopes that such a small increase won’t scare investors and bring volatility to the markets. This is the first time rates have been raised since June of 2006, which is an extremely long period of time to go without a rate hike. Yellen admitted that rates would remain low for the foreseeable future, but would be raised incrementally as time goes on. She further added at a press conference that “We’ve worried about the fact that with interest rates at zero, we have less scope to respond to negative shocks.”
Or in other words, the Fed is shooting blanks. They can’t inflate the currency any more without bursting our bubble economy. On the other hand, they know that raising rates will cause the bubble to deflate, since easy money is the only thing supporting it. They’ve been stuck between a rock and a hard place for a long time, and they’ve just decided to take on the rock.
Brace yourselves. The easy money train has made its last stop, and history’s biggest credit expansion has reached its peak. There’s only one direction this economy could go from here, and that’s down.
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Contributed by Joshua Krause of The Daily Sheeple.
Joshua Krause is a reporter, writer and researcher at The Daily Sheeple. He was born and raised in the Bay Area and is a freelance writer and author. You can follow Joshua’s reports at Facebook or on his personal Twitter. Joshua’s website is Strange Danger .
Source: http://www.thedailysheeple.com/fed-raises-interest-rates-for-the-first-time-in-a-decade_122015
