Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Housing Market Collapse 2.0 Has Begun
By: David Haggith

Will the Fed’s Tightening Trigger Another Crisis?
By: Arkadiusz Sieron

Merk Research - U.S. Equity Markets
By: Axel Merk

No currency manipulation by China’s government, yet
By: Steven Saville

India Soaks Up Physical Silver Supply
By: Craig Hemke

50 Reasons Why This Bull Market Has Longer To Run
By: Avi Gilburt

Gold Resource Corporation Expands Arista Mine With Drill Intercepts Including 23.39 Meters of 2.00 g/t Gold, 200 g/t Silver and 2.08 Meters of 1.98 g/t Gold, 1,583 g/t Silver in New Vein Discovery
By: Gold Resource Corporation

“Biggest Bubble in the History of Mankind” Is “Going To Burst” – Ron Paul
By: GoldCore

Asian Metals Market Update: July 18 2018
By: Chintan Karnani, Insignia Consultants

Gold Seeker Closing Report: Gold and Silver Fall Over 1%
By: Chris Mullen, Gold Seeker Report

 
Search

GoldSeek Web

 
555 TRILLION Reasons Why the Fed Won’t Let Rates Normalize


 -- Published: Friday, 15 May 2015 | Print  | Disqus 

By Graham Summers

 

The biggest question for investors today is that whether or not rates will rise in 2015.

 

The Fed may raise rates a token amount this year, but the move will be largely symbolic. With over $100 trillion in bonds and over $555 TRILLION in interest rate derivatives trading based on interest rates, the Fed will not be normalizing rates at any point in the future.

 

Indeed, former Fed Chairman Ben Bernanke admitted this in private during a closed-door luncheon with several hedge funds last year. Bernanke’s exact words were that rates would not normalize anytime during his “lifetime.”

 

So the Fed may raise rates from 0.25% to say 0.3% or possibly even 0.5%. But we won’t be entering a hawkish period for the Fed by any means.

 

The reason is very simple… any normalization of rates would implode the bond market.

 

The fact is that much of the globe, particularly the developed west, is up to its eyeballs in debt. Mind, you, this is based solely on official public debt numbers.  If you include unfunded liabilities, then the US, most of Europe, Japan, and even China are sporting Debt to GDP ratios well over 300%.

 

In the US, a 1% increase in interest rates means over $100 billion more in interest rate payments. The US is already running a deficit (meaning that it spends more than it takes in via taxes) and has been for most of the last 20 years.

 

Of course, the deficit could become larger to service the increase in interest payments, but with the US already having to resort to issuing NEW debt to cover OLD debt that is coming due, this is a slippery slope. The US issued over $1 trillion in new debt in an 8-week period for precisely this purpose.

 

The reality is as follows:

 

1)    Bonds are the biggest bubble in history, dwarfing even the real estate bubble of the mid-2000s.

 

2)    This bubble also encompasses the bubble in Central bank policy. Every single Central Bank policy is focused on maintaining the bond bubble and the TBTF banks with the greatest derivative exposure to it.

 

3)    When the bond bubble bursts, entire nations will fail, as will the Central Banks themselves. Draghi, Yellen, Kuroda et al will do everything in their power NOT to allow the system that has put them at the top of the economic food-chain to collapse no matter what the costs for ordinary citizens.

 

4)    Rates will only rise significantly ONCE the bond bubble bursts. There may be symbolic raises here and there, but with over $555 trillion in derivatives based on interest rates floating in the system globally, you can bet there will NEVER be a shock and awe interest rate raise.

 

5)    This bubble, like all bubbles, will eventually burst no matter what the Central Banks do. When it does, everything about modern finance will prove misguided and based solely on the belief that Central Banks can control the system.

 

If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

 

You can pick up a FREE copy at:

http://www.phoenixcapitalmarketing.com/roundtwo2.html

 

Best Regards

Phoenix Capital Research

 


| Digg This Article
 -- Published: Friday, 15 May 2015 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2018



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.