OTCPK:KRCLF - Post by User
Comment by
cleareyeon Aug 02, 2023 9:02am
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Post# 35568557
RE:Slowly then quickly
RE:Slowly then quicklyI suppose that on the 'slowly then quickly' road is debt building followed by an increase in interest rates and then a decrease in available income to finance the debt. Then, one day, a person or a country find out that the debt cannot be paid.
That was my intuitive thought when I saw Fitch's downgrade of the US treasury notes, finely categorized in a way that I did not fully understand.
The central banks are going to be limited in their increases in their benchmark interest rates because the Canadian, US and European countries will not be able to pay the service charges on their debt. Fitch and other credit rating agencies better get out their erasers and chalk.
My conceptual theory is that the FED will probably level off at 6% and try to make that interest rate the new normal - 'forever'. Our western economies have suffered in untold ways with the zero interest rate policies we've had for too long. Japan has had the zero interest rate policies for much longer. Someone schooled in this sort of economic theory can write about the harmful effects of zero interest rates. For me, the one telling negative measure for near zero interest rates in very high house prices as the capital cost of a house kept rising as a function of people's ability to pay ever-dropping mortgage payments.
Low interest rates have actually been the silent killer of affordable housing. What amazes me in this age of communication is that a simple truth such as this is not widely communicated. I guess the irony is too great.