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12 Reasons Why The Federal Reserve May Have Just Made The Biggest Economic ....

• theeconomiccollapseblog.com by Michael Snyder

On Wednesday, the Fed raised interest rates for the second time in three months, and it signaled that more rate hikes are coming in the months ahead.  When the Federal Reserve lowers interest rates, it becomes less expensive to borrow money and that tends to stimulate more economic activity.  But when the Federal Reserve raises rates , that makes it more expensive to borrow money and that tends to slow down economic activity.  So why in the world is the Fed raising rates when the U.S. economy is already showing signs of slowing down dramatically?  The following are 12 reasons why the Federal Reserve may have just made the biggest economic mistake since the last financial crisis…

#1 Just hours before the Fed announced this rate hike, the Federal Reserve Bank of Atlanta's projection for U.S. GDP growth in the first quarter fell to just 0.9 percent.  If that projection turns out to be accurate, this will be the weakest quarter of economic growth during which rates were hiked in 37 years.

#2 The flow of credit is more critical to our economy than ever before, and higher rates will mean higher interest payments on adjustable rate mortgages, auto loans and credit card debt.  Needless to say, this is going to slow the economy down substantially

1 Comments in Response to

Comment by PureTrust
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When the FED gets into rate-raising mode, it stimulates the economy. Savvy home investors realize that if they borrow, they can't lose. Why can't they? Because when rates go up, inflation goes up, and the price of everything goes up. But, so do wages. So, if you are making $10 per hour, in a few years inflation and interest rates will make living cost so much more that after a while you will be making $20 per hour. It's easier to pay off that loan on $20 per hour than $10.



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