STORMY WATERS in the current sea!
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Raising interest rates will continue to make banks that have acquired treasuries, insolvent. If interest rates are not raised, we get more inflation. Tbf, interest rates need to be higher than the inflation rate (~18% at least) to make a dent, so 5% ain't doing squat.
Our economy is screwed either way. Buckle up folks.
Yeah the markets run on fumes though. If the fed publishes a rate hike, people start running to their investments to 'protect' them. Almost like a verifiable rumor. It has a highly emotional component,
As you pointed out, the interest rates should be higher than inflation so that people are committed to saving money, otherwise one is stoking inflation, because people see that buying stuff as soon as possible, no matter what the cost, is better than leaving it in the bank to burn. If people spend all their income buying stuff on the day they get it to avoid the price-hikes, then you have a problem not dissimilar from Weimar.
With the dozens of banks breaking, yes. That being said, they're all purposely being consolidated into under a dozen big banks like jp Morgan so no, because this is all intentional to roll out the cbdc. Over a decade of low rates where every bank takes tons of risk, then raise them so only the big fish survive and eat the small ones.
The rate hike doesn't matter but the end result sure will
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