The Fed’s Chatter About a Rate Hike Is to Appease Foreign Investors – Which Includes Money Launderers
By Pam Martens and Russ Martens
September 16, 2015
Tomorrow at 2 p.m. investors worldwide will learn if the U.S. Federal Reserve has decided to cease its endless blather about its elusive plan to hike interest rates and actually boost rates from the zero bound range it has enforced since December 2008.
A hike in rates will be comforting to foreign investors who rely on a strong U.S. Dollar to protect the value of investments they make in this country: investments like multi-million dollar condos in Manhattan, manufacturing plants in South Carolina, stakes in publicly traded U.S. companies, private equity funds and mega amounts of commercial real estate.
A stable or rising U.S. Dollar – supported by Fed talk that the U.S. economy is growing strongly enough to withstand a rate hike – is mothers’ milk to the ears of foreign investors since it means that if they should choose to cash out their U.S. investment and convert the Dollars into the currency of their home country, they would have a profit on the currency trade or, at least, a stable exchange rate. (When foreigners invest their money in the U.S., they have to hope that both the actual investment will appreciate in value and also that they don’t suffer losses when they convert U.S. currency back into their domestic currency.)
These many months of happy chatter from the Fed about the coming rate hike and improving U.S. economy has supported the U.S. currency and prevented any serious foreign capital outflows owing to a slumping U.S. Dollar. While foreign capital flight is not one of the Fed’s monetary policy mandates, you can bet that it is causing some sleepless nights among researchers at the Fed.
Continued below:
http://wallstreetonparade.com/2015/09/the-fed...aunderers/
By Pam Martens and Russ Martens
September 16, 2015
Tomorrow at 2 p.m. investors worldwide will learn if the U.S. Federal Reserve has decided to cease its endless blather about its elusive plan to hike interest rates and actually boost rates from the zero bound range it has enforced since December 2008.
A hike in rates will be comforting to foreign investors who rely on a strong U.S. Dollar to protect the value of investments they make in this country: investments like multi-million dollar condos in Manhattan, manufacturing plants in South Carolina, stakes in publicly traded U.S. companies, private equity funds and mega amounts of commercial real estate.
A stable or rising U.S. Dollar – supported by Fed talk that the U.S. economy is growing strongly enough to withstand a rate hike – is mothers’ milk to the ears of foreign investors since it means that if they should choose to cash out their U.S. investment and convert the Dollars into the currency of their home country, they would have a profit on the currency trade or, at least, a stable exchange rate. (When foreigners invest their money in the U.S., they have to hope that both the actual investment will appreciate in value and also that they don’t suffer losses when they convert U.S. currency back into their domestic currency.)
These many months of happy chatter from the Fed about the coming rate hike and improving U.S. economy has supported the U.S. currency and prevented any serious foreign capital outflows owing to a slumping U.S. Dollar. While foreign capital flight is not one of the Fed’s monetary policy mandates, you can bet that it is causing some sleepless nights among researchers at the Fed.
Continued below:
http://wallstreetonparade.com/2015/09/the-fed...aunderers/
