Lowering or raising rates maybe a 2-edged sword

Hey Richard, thanks for complimenting and I hope you have a fun, relaxing, and lucrative day and weekend too!

Hey Edwin,  I am not yet convinced that we will realistically see a 2% inflation rate.  More critical are the prices that people will have to pay for homes if rates are no lower than 6%.  This tragic situation will only allow those who have earned enough money to either pay cash, or be able, due to their current equity in their home, or a considerably larger down payment (not concerned with the interest rate at the time of purchase) for their starter move-up or dream home.  This will have a dramatic and unfortunate effect on those who will never be able to afford to purchase and in turn be able to build their long-term wealth.  One's primary residence has generally been the most valuable path in creating long-term wealth.  Unless we see moderations or major price reductions and inventory increases over the next 5-10 years I see a society of renters for the long run. Proper and substantial education for consumers will be the antidote and solution.  I am not sure this is what is in the cards going forward and whether our government or individual consumers will step up to the plate and care enough about themselves or their families to pursue their next level of financial security. Those who will do the right thing will succeed for the benefit and future of themselves and their heirs and those who could have, should have, or would have but didn't, will be left behind.  This is why rental properties will be the optimum best and safest investment for the future, besides a business and the stock market.  The reason I feel this way is that our government doesn't tell us the whole truth.  They produce numbers that make no logical sense and are not reflective of what is truly and accurately going on in our economy.  Unfortunately, they cannot, because telling us the truth will potentially curb people's purchasing, and as I said in my current and previous columns, consumer spending is 70% of our economy.  The real conundrum is that they haven't or prefer not to figure out how to convey and educate our population on how to balance spending and saving which would be much more beneficial in the long run in building long-term wealth.  The reality is, that they want most people to be poor and not better off, and/or more comfortable financially   Who would then wash our restaurant dishes, work at Target, KMart, our supermarkets,  pick our crops via HV1 visas, etc?  FDR when President, back in 1932 created our educational system and deemed it more necessary that we needed to create more workers, not entrepreneurs, otherwise, we wouldn't have our basic needs and services satisfied for our consumer population (welcome to Capitalism 201), and those who could and would be the ultimate consumers and conspicuous spenders that make up our economy.  It is a sad commentary on how those at the top could care less about the 30+% on the bottom and this is why a Great Society like the U.S. and others throughout history as well as Great Empires like the UK have consistently failed or gone down in stature.  Pick up the book by Ray Dalio, Billionaire founder @ 27, of the remarkably successful Hedge Fund Bridgewater Associate who wrote the book, "Principles" and his most recent critical dissertation "The New World Order" that he penned a few years ago.  This provides very accurate and concise historical information and precedents on how things were and how they will always be concerning who rules the world over time and how they get into that position.  the average age of a Great Empire like the UK and the U.S.A. as a great society is approximately 250 years according to Ray Dalio's extensive research in writing his book.  We are 247 1/2 years young and have 2 1/2 years left to be either more mediocre on the world stage, go down into oblivion, or raise our expectations and aspirations to excel and continue to be the world's leader, reserve currency, and Democratic savior.  Only time will tell over the next few years!  G_D help us!

Hey Bill, I am enjoying my weekend with my kids and grandchildren and cannot wait til my son and daughter-in-law have their new son on approximately, March 22 as our name continues for the next 80-100 years if we don't implode or blow ourselves up!  I see why Alon Muskk, Jeff Bezos, and Richard Branson are emphatic on going to Mars because I believe they feel we are failing on Mother Earth as we have continued to pollute, change our climate, and become a divisive human race, constantly doing everything against each other, not caring one iota about anyone or anything as this will test our survival going forward..

Hey John you are 1000% spot on!  However, that is only 1 of several dilemmas that we could be facing over the next 12-36 months!  Lowering the rates too much will only exacerbate the return of greater inflation, making the cost of goods and services spike, once again.  We are in demand-pull inflation (or what could be called cost-push inflation, where certain in-demand goods and service prices are still increasing because the raw cost of those goods and services from the distributor and/or manufacturer continues to increase and demand continues), where demand is making prices increase, partially due to the increase in some people's wages and income, which is slowly but surely being used up and prices, unfortunately, aren't decreasing.  But then again, increasing interest rates, which is still a possibility on the reverse side, will potentially slow and cool off our economy causing deflation, which in turn would cause layoffs, greater foreclosures, and probably decreases in home prices.  Finally, stagflation could turn into high inflation and low growth, similar to what occurred in the70's.  Our current global environment is very similar to what had happened and the similarities are staring us right in the face, but very few are cognizant and aware of what is and will be happening going forward.  Things just might change in 2024-2025, so be aware, be careful, and watch where your money is invested especially outside of the real estate sector!  Lastly, Jerome Powell has his work cut out for himself, and unfortunately, the levels to which he lowered rates and did not step in soon enough to begin slow increases (and not 11 increases!),  I believe will come back to haunt him and be on his epitat for many years to come.

GM Patricia,

Did you read my replies to Edward and John?  If not, please read them.  We are in a huge mess in the U.S. as well as around the world.  Yes, stores in many locations are closing, partially due to Amazon and all the other internet businesses.  However, believe it or not, 80+% of consumers are still purchasing via brick-and-mortar stores as per my research.  However, due to so many purchasing online, there are not enough dollars coming in to pay the rent, electricity, heat, labor, etc. in stores, for many to stay afloat.  Moreover, many are still doing the same thing expecting something miraculous and magical will happen to elevate their businesses, and we call that "business insanity."  Pivoting was the name of the game years ago especially when the COVID-19 pandemic hit us on March 22, 2020, in the U.S.A.  Complaining was the word of the day back then, instead of letting the market affect and dictate how your business would do, one needed to change their strategies not only to survive but to excel and become a leaner,  lucrative, and profitable entity.  Lastly, all that money they handed out was a 2-edged sword too, as so many sat back and did nothing but "Woe is me" mentality and never sat down to change the way they were doing business.  It was a wake-up call for so many business people.  Moreover, our government never created a check and balance in the way they provided monies and over 400 billion was stolen by foreign entities without any recourse to recover those dollars.  Those that are being caught is a drop in the bucket.  Lastly, we kept our interest rates way too low for way too long (see my comments to Edward and John.)