Maronti, certificates of deposit (cds) were first
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Posted On: 12/19/2018 3:09:47 PM
Maronti, certificates of deposit (cds) were first issued in about 1950. Since then there have been 6 or 7 recessions, but none have started when the average national interest rate on cds was below 5%. So, there will probably be a recession, but probably not for a year or two.
What's happening now is simple to see. Very low unemployment is causing labor shortages, which are driving wages up.
And the ongoing tariffs and trade wars are causing the cost of basic materials to rise. Add the two together and you get inflation, so The Fed tries to counter that by raising interest rates.
Then the dollar gets stronger because of the higher interest and it becomes harder for manufacturers to export goods because they have higher costs and the importing countries' currencies have fallen in relation to the dollar.
Then we get a recession.
What's happening now is simple to see. Very low unemployment is causing labor shortages, which are driving wages up.
And the ongoing tariffs and trade wars are causing the cost of basic materials to rise. Add the two together and you get inflation, so The Fed tries to counter that by raising interest rates.
Then the dollar gets stronger because of the higher interest and it becomes harder for manufacturers to export goods because they have higher costs and the importing countries' currencies have fallen in relation to the dollar.
Then we get a recession.
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