Posted on 12/17/2021 11:00:14 AM PST by Browns Ultra Fan
The Freddie Mac 30-year mortgage commitment rate rose to 3.12%. But once we subtract the gut-wrenching inflation rate, the REAL 30-year mortgage rate is -3.689%.
The nominal Freddie Mac 30-year commitment rate rose to 3.12% which is still lower than 3.18% back on April 1, 2021 after surge in rates following Biden’s taking the office of Presidency in January.
Meanwhile, the REAL Case-Shiller National home price index (CS National YoY – CPI YoY) is growing at the fastest rate in history. Great if you already own a home, but lethal if you are renting and want to move to homeownership.
Meanwhile, REAL wage growth is at -1.94% YoY.
Well, Chairman Powell and The Gang failed to raise the Fed Funds Target Rate yet again, but let us know that they will tighten someday soon. The Fed Funds Futures are signalling a rate hike at the June 2022 meeting and another at the November meeting.
While The Fed couldn’t care less about the Taylor Rule, it is still interesting to note just how out of touch The Fed FOMC is with reality. The Taylor Rule indicates that their target rate should be 16.94% rather than the current target rate of 0.25%.
Keeping the target rate unchanged in the face of gut-wrenching inflation is a bold strategy, Cotton.
The Fed has painted itself into a corner.
If they raise their interest rates up to the inflation rate, there will be a monumental crash that will get the Great Depression renamed the Minor Recession.
Sounds to me like a joint effort to destroy the dollar.
It doesn’t make any sense.......................
Precisely. They can’t raise rates and still service the debt. They are screwed.
No, make that WE the middle class are screwed.
its all fake news. The Fed doesn’t “print money” and the Fed doesn’t control interest rates!
LOL.
They can “service” the debt by creating more credit to service the debt...but that just creates an inflationary nightmare in the form of an infinite inflationary spiral.
(More debt needs more interest which requires more debt which requires more interest.....)
Since the dollar is (for now) the world’s primary currency for international trade that means that the entire world will be a part of that nightmare—until they decouple from the dollar.
Btw we have one example happening in Turkey right now:
Here’s what I wonder.
They will raise interest rates because they simply have to to avoid disaster. I don’t think they care about the cost of servicing the national debt because Mitch and the gang will forever raise the debt limit. If they keep raising the limit, does it matter if they raise the rates?
Just a thought.
Sounds like, if you have the spare money, it is time to buy land and houses....
Asset inflation disguises the issue of wage stagnation. The amazon and walmarts of the world help to keep prices in check, and increased technology helps such innovation get a better return on the dollar.
“Never underestimate Joe’s ability to f*(# things up.”
>>Sounds like, if you have the spare money, it is time to buy land and houses....
Might be better borrowing the max you can against stuff you already home - locking in the low interest rate now, and then pay back the loan with ever cheaper dollars in the future as rates rise.
If they rise far enough, you can let that money sit in a bank earning 5-6-7-8% and use the interest to pay of your 3% debt.
Yes, blah, blah technical details... derp.
The debt has to hit critical mass eventually. That is a FACT. You can’t raise the debt forever to a massive magnitude. At some point, you have a financial collapse. When and how high has everything to do with people’s faith in money and continued belief that everything is fine. Once confidence is gone, you get a financial collapse with a nice debt reset. Meanwhile, everybody suffers in the extreme.
Raising rates does directly impact the debt. It means that the government has to pay more money to service the debt because the annual interest rate of payment is higher. Think loan shark. If you had to pay a loan shark 100% interest every week, pretty soon that is all you could afford and you would have no money for for food, rent, gas, electricity, etc.
But the government won’t cut back on spending just because the amount they spend servicing the debt becomes huge. Instead, they keep on spending like usual but just add the massive new debt servicing about... to the debt.
In that way, the debt begins to accelerate. The financial collapse then comes sooner than later. The world won’t end, it will just be Great Depression II on steriods, but with massive roving bands of rioters doing their best immitation of Mad Max.
They can’t raise rates or the debt explodes. It’s a trap.
There will NEVER be a ‘crash’ allowed on a democrat watch. If Trump of any other Republican wins in 2024 there will be a correction of monumental proportions.
“... the REAL 30-year mortgage rate is -3.689%.”
So where do I sign up to be paid to have a mortgage?
Chaos theory rules—the Democrats/Federal Reserve may do everything they can think of to stop a crash—but the insane complicated financial markets of the world may be beyond their control.
Short version—s&^% happens!
The Fed will try to raise rates and chaos will ensue. Then they will very shortly have to lower.
If the Fed is finally audited (for the first time?) the audit report would crush the dollar.
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