[Alberta's Child]

The scary thing here is that we're looking at a long-term deflationary trend in the U.S. economy. There's no way the Fed can ever stop this low interest rate cycle effectively, since it's the lenders (indirectly the "savers") who get screwed in the long term.

Paying off a 30-year fixed rate mortgage at an interest rate around 4.5% is great for the borrower, but the lender is going to take a huge bath on this if: (1) interest rates rise; and/or (2) the effective currency inflation rate is higher than 4.5%.

[djf]

They CAN’T raise rates!

It would totally implode the economy!

http://www.freerepublic.com/focus/f-chat/2930615/posts

[Mouton]

The lenders are not going to take any hit unless they hold the mortgages. No, they will discount them back to the government....just like before the 2008 disaster.

The people who will killed beyond belief are the dopes who buy any of this worthless paper which will be repackaged into FHA bonds. Of course when they cannot sell them to the public including mostly businesses like insurance companies, who will buy them...ahem, here comes Ben the Bandit who will gladly put them on the fed balance sheet. Meanwhile, the cycle continues, spins faster until the end is reached in one super nova of devaluation and inflation.

Remember to load up on the three most valuable metals: Gold, silver and lead.