OPINION: Why Interest Rates Are Climbing and the Magic Money Machine
I think it’s quite obvious that the reason why inflation is so high right now is because of all of the money that has been printed over the last couple of years. At least, that’s part of it, but if you ask me, I think that there is still more to the story.
As numbers came out this week, it was revealed that we had our first official negative GDP quarter which means that we are almost to the point of an official recession. As I’ve said before, we may already be in the recession, but don’t have the official numbers to support it yet.
Interest rates have gone up extraordinarily and it’s hurting a lot of people, especially those trying to buy homes. The housing market is already terrible for buyers as prices are still way too high and now you can add the high interest rates to make things even more difficult. Eventually, sellers are going to have to come down with their asking prices if they want to sell and there is going to be a lot more to choose from.
But in my opinion, I don’t think that the raising of interest rates is purely a result of reactionary spending from the government, I think that it’s also anticipatory.
What I mean is that I think that there is potentially another stimulus check coming soon and that they’re trying to raise interest rates ahead of time to compensate for it. It would likely come in the form of a fuel relief bill or something and we’d get a couple hundred bucks.
So, the Fed will be rebooting that magic money machine once again, but there is yet one more factor in all of this as well. You see, higher interest rates don’t just affect us, they affect how much the government has to pay for their debt as well.
For all the talk about combating inflation, the Federal Reserve is likely to reverse course and continue to print substantial amounts of money because doing otherwise would threaten the federal government with insolvency, according to macroeconomic analyst Luke Gromen.
Fed chairman Jerome Powell has been talking about the central bank’s aggressively raising interest rates in order to tighten the money supply, curb demand, and thus relieve inflationary pressure in the economy. Inflation hit a four-decade high of 8.6 percent in May. The Fed raised rates two weeks ago by 0.75 percent, the most in over 20 years.
It will only take a few more months, however, for the Fed to reverse course, Gromen predicted.
“I think they have to. I don’t think they have a choice,” he recently told Wealthion’s Adam Taggart.
Our “leaders” have been running our country into the ground. Elections have consequences and this is what happens when bad leaders are chosen. It’s just a shame that some people are too dumb to realize their own errors.