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Jabbabhoy

What the FED is happening???

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Admittedly I am a bit of a voyeur on this forum and other twitter accounts about the economy, housing and interest rates. Again I will admit that I do not have a financial background and do not thoroughly understand the inner workings of economics.

From the various articles that I read I tend to find contradictory points and here are some of them, all linked in one way or another.

1) Trump wants to lower $ but up interest rates - surely you cannot do one with the other?

2) US know that a recession is coming therefore are trying to get interest rates up before a crash - again seems contradictory and why?

3) US dollar going to plummet against Euro next week, ECB. Now looking to rise rates. - Why would this be? Are their hands being forced by US and surely if US raises interest rates the dollar will get stronger???  Check bamabroker out on Twitter for this.

 

just find this generally annoying not understanding but maybe it's obvious ?

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I can try a few:

4 hours ago, Jabbabhoy said:

1) Trump wants to lower $ but up interest rates - surely you cannot do one with the other?

If other countries he sees as manipulators allow their own currencies to be strengthened, the dollar would be weakened on the pair. That's the approach Trump has hinted at most strongly. He wants a stimulus package that may lead to more upward pressure on rates, but not a rate hike in and of itself.

4 hours ago, Jabbabhoy said:

2) US know that a recession is coming therefore are trying to get interest rates up before a crash - again seems contradictory and why?

This would allow them some room for a monetary policy response to an economic shock. As it stands, they have few tools to tackle a crisis.

4 hours ago, Jabbabhoy said:

US dollar going to plummet against Euro next week, ECB. Now looking to rise rates. - Why would this be?

Inflation, GDP and employment are all rising in most of the major EU economies. It's recommended to raise rates in advance of inflation spikes for a smoothing effect - even Yellen is considered to be acting at the last minute, if not later.

4 hours ago, Jabbabhoy said:

Are their hands being forced by US and surely if US raises interest rates the dollar will get stronger?

Some of the inflation in the EU may be imported from the US, but most is probably due to ECB stimulus and unsustainable lending.

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Analysts say lots of things. They are paid to say lots of things. You are bound to find contradictions.

The only near-certainty I think is that interest rates are heading up, but it's a question of by how much and how soon?

I think they are going up a lot quicker than most analysts expect.

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TBH I think they willl. A race to the top as such. Being informed by the older generation a run on the currency I.e the £ will see interest rates rise quickly and people will come unstuck 

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10 hours ago, Jabbabhoy said:

Admittedly I am a bit of a voyeur on this forum and other twitter accounts about the economy, housing and interest rates. Again I will admit that I do not have a financial background and do not thoroughly understand the inner workings of economics.

From the various articles that I read I tend to find contradictory points and here are some of them, all linked in one way or another.

1) Trump wants to lower $ but up interest rates - surely you cannot do one with the other?

2) US know that a recession is coming therefore are trying to get interest rates up before a crash - again seems contradictory and why?

3) US dollar going to plummet against Euro next week, ECB. Now looking to rise rates. - Why would this be? Are their hands being forced by US and surely if US raises interest rates the dollar will get stronger???  Check bamabroker out on Twitter for this.

 

just find this generally annoying not understanding but maybe it's obvious ?

My highlight.

If the US knows that a recession is coming it is contradictory because increasing interest rates when the economy is still weak might just bring on a continuation of the economic collapse - although they will be blagging that recovery is happening to justify the interest rate increases.

It doesn't matter to them that increasing interest rates might (or might not) have a detrimental effect on the real economy in the short, medium or long term.  It's been evident that they aren't concerned about the real economy and people's lives in general just about continuing their own troughing - that and votes.

However it is important to them that they can claim they're still in control and still in the driving seat.  Reducing rates from the current levels into unprecedented negative territory would suggest and emphasise to most people that they aren't in control and in the driving seat and that things are well out of control and they have been reduced to extreme knee jerk policies and extreme knee jerk economics.  Calls for a new system would be deafening.

In any event they already know that their policies don't work for the real economy - that is the zirp and QE policies and all the rest etc  - they've admitted that through their own Bank for International Settlements (BIS) - but it is important to them that they appear to be in control as if they know what they're doing for the real economy (which they pretend to demonstrate with their widely reported activity on interest rates and all the fuss and hoo-ha surrounding it all) - and they don't want to risk losing that (apparent) control as their position of control is so enriching for themselves.

Edited by billybong

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I guess this will force the ECB and BOE hand, I have always been told by someone a lot more economically savy than me that when IR rise it will be quick. A run on the pound will exacerbate this

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Just now, richc said:

stop wasting your time here!!!

 

Before you spam every thread with this, might I suggest you follow your own advice? :rolleyes:

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