Comments on: WHEN WILL THE FED RAISE RATES? http://pragcap.com/when-will-the-fed-raise-rates Sun, 12 Feb 2012 06:49:06 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Willy2 http://pragcap.com/when-will-the-fed-raise-rates/comment-page-1#comment-9003 Willy2 Mon, 16 Nov 2009 07:03:01 +0000 http://pragcap.com/?p=12810#comment-9003 Australia has an additional problem why it needs to raise rates: It has a current account deficit. Australia has an additional problem why it needs to raise rates: It has a current account deficit.

]]> By: Rob http://pragcap.com/when-will-the-fed-raise-rates/comment-page-1#comment-9001 Rob Mon, 16 Nov 2009 03:57:04 +0000 http://pragcap.com/?p=12810#comment-9001 High real rates. A nightmare for the indebted. Not so bad for those with large savings. High real rates. A nightmare for the indebted. Not so bad for those with large savings.

]]> By: Willy2 http://pragcap.com/when-will-the-fed-raise-rates/comment-page-1#comment-8987 Willy2 Sun, 15 Nov 2009 09:35:50 +0000 http://pragcap.com/?p=12810#comment-8987 I see another reason why the RBA has raised rates Down Under. With very low interest rates in the US and with a US Current Account Deficit the rest of the world is till accumulating dollars. (B.T.W. the US is - IMO - "Hell Bent" on maintaining a Current Account Deficit.) These dollars end up in China. The chinese are using those dollars to buy commodities e.g. iron ore from Australia. So, Down Under is seeing a (large) inflow of dollars. And the RBA fears that all this money will blow an even bigger real estate and debt bubble Down Under. And that's - IMO - why interest rates are going up Down Under. There's another force that's about to push up rates all around the world or - at least, prevent rates from falling even more. Japan ! In Japan pensionfunds have - on average - started to sell their holdings in order to meet their pension obligations. As we all know, selling assets means lower prices and as a result HIGHER yields. And, sooner or later, there will be a force pushing rates up all around the world: Pensionfunds. So, when rates are going up then it has NOTHING to do with rising inflation. On the contrary, it actually is an extra DEFLATIONARY force. I see another reason why the RBA has raised rates Down Under. With very low interest rates in the US and with a US Current Account Deficit the rest of the world is till accumulating dollars. (B.T.W. the US is – IMO – “Hell Bent” on maintaining a Current Account Deficit.) These dollars end up in China. The chinese are using those dollars to buy commodities e.g. iron ore from Australia. So, Down Under is seeing a (large) inflow of dollars. And the RBA fears that all this money will blow an even bigger real estate and debt bubble Down Under. And that’s – IMO – why interest rates are going up Down Under.

There’s another force that’s about to push up rates all around the world or – at least, prevent rates from falling even more. Japan ! In Japan pensionfunds have – on average – started to sell their holdings in order to meet their pension obligations. As we all know, selling assets means lower prices and as a result HIGHER yields. And, sooner or later, there will be a force pushing rates up all around the world: Pensionfunds. So, when rates are going up then it has NOTHING to do with rising inflation. On the contrary, it actually is an extra DEFLATIONARY force.

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