Everyone knows that the interest rates have artificially been kept at their lowest possible level in our lifetime. The US Government has put pressure on the FED to keep those rates historically low in order to stimulate the economy and its main engine, which is the housing market. We are far away from the nearly 20% interest rates we have seen in the 80’s…
Mark my words, we will never again see such low interest rates in our generation, that is why we see the markets picking up, as many people rush to take advantage of 3.5% fixed terms over 30 years right now. But ACHTUNG, the interest rates went down to 2.9% at their lowest point, and are now passing the 3.5% mark, the only way to go from here is up, and up, and up.
Here is why; while the FED was setting artificially low rates, it was also expending the money supply. The FED denies printing more money, which is probably true, however, what they are not telling you, is that they are creating digital fiat money out of thin air. This extension of our money supply is creating a real 10% inflation rate at the moment, which will likely bring us several years of 100% inflation in the US starting in the next couple of years.
What does this have to do with interest rates? Simple, in order to try to stabilize the inflation, the FED now has to start raising the interest rates indefinitely until the inflation gets under control. There are no other way to stop the inflation at this point. From here on, the interest rates will not stop climbing until they reach the mid teens.