No. of Recommendations: 4

I don't think this is true. Interest rates have already risen quite a bit above zero and they continue to creep up. There will be a time when inflation heads up again and the Fed responds by raising interest rates significantly. The past ten years have been an anomaly, not a new era.

Elan


I don't think I agree with you on that. Somewhere way down the road you may be correct but anytime in the next decade or two I do think it is a new era in the sense that the US simply can't afford high interest rates due to the huge debt payments they have to make.

Now maybe some external factors will come along and nothing the US does can control it but I think the FED especially wants to maintain interest rates and inflation on the low side and will do everything possible to keep it relatively low.

The 70s/80s had a number of factors that contributed to the high inflation, everything from going off the gold standard, price controls, etc. Obviously with the state of politics similar mistakes could be made again but I think it falls into the very low probability side of things.

I do think the FED would like to get the rates up to 3% so they can drop them in the event the economy needs stimulating.

We'll see.
Rich
Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.