U.S. Economy Too Weak For Rate Hike


The Federal Reserve was expected to release their policy decision today on whether or not they will be increasing interest rates and they've decided once again to halt from doing so. Even though they've previously indicated that we might see several rate hikes this year. By not raising rates it is tantamount to admitting weakness because if they thought the economy could handle a hike then they would follow through with their promise of doing so. And once again we have rumors already circulating that perhaps next time will be the time that we see a rate hike. 

 

Former Dallas Fed President, Richard Fisher, warns that the people just need to deal with the correction that's coming. “I would be prepared when they move – and I hope they move some time in June – there [will] be a settling in the market place. There will be a correction. Suck it up. Deal with it. That's reality,” he said. The Fed has insinuated that it would raise rates many times but more people are beginning to see that the data isn't there to support such a hike. And the last time they tried to do an increase, even if arguably only a symbolic one, the markets responded negatively.

 

The IMF also previously declared at the end of last year that 2016 would be a year that would have disappointing economic growth. While there are some who believe that a rate increase might be just around the corner, there are others who have said for many years that the Fed would never raise their rates again. The economy isn't strong enough to handle a hike and they only prove that by promising one and then not following through.

 

There are a variety of financial and economic experts who have been warning the public that the dollar collapse is imminent and they urge folks to prepare their finances accordingly for such an event. The United States is trillions of dollars in debt, their currency has been eroded in value, and quantitative easing hasn't seemed to make anything better since the market isn't strong enough to handle a hike. Some experts, like Mike Maloney, say that the recession could already be here and he suggests that we will already be within a recession before we have it confirmed to us officially.

 

 

 

 

Many people are also expecting China to move forward with its own gold-backed currency in the end of this year and some believe that move could play a role in the collapse of the U.S. dollar.   Apple just this week reported that it saw its first decline in 13 years. This prompted some, like Mike Maloney, to suggest that this decline is yet  another indicator of the slow down in global economic growth. 


The vote this week on raising the rates was 9 to 1, with Kansas City Fed President Esther George dissenting for the second time in a row on the move to keep rates unchanged.  

 

 

  

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