Financial markets are up today on word that the Fed won't be raising interest rates right away!
Let's just ponder the consequences of increased interest rates, shall we?
- Those poor suckers who keep money in savings accounts would get a slightly larger pittance.
- Rates on adjustable-rate mortgages would go up, leading to a wave of defaults by the overextended, leading to a wave of foreclosures, leading to a wave of bank failures bailouts.
- Interest on new government debt would go up, leading to increased costs as governments rolled over existing debt (much of which is now refinanced annually).
So, just how surprising is it that rates will be staying artificially low for the moment? Or for the next moment, or the next...?
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