Economics Lesson - Nov. 4th. ( The Fed and What it is Doing)

 Normally in economics, interest rates are used to regulate demand, higher, to slow, lower to up demand for goods and services. 

The US is different from the rest of the world in that most of our demand is coming from the Millennials. These of course are people in 25-41 range. These people are driving the economy of the US. They are to the age they are buying homes, cars, etc. 

The US is different from the rest of the world in which Americans age 25-41 have no peers. There are not many German, or Korean, or Chinese, or Japanese or Italian Millennials at all. And our central bank, or the Federal Reserve( The Fed) knows this. 

The Fed is trying to control spending and buying new homes, cars, having kids.( kids are expensive. I seriously wonder what this upcoming recession will do to the US population? )

And while the Fed is using interest rates to try and control inflation, now,  they are looking to the future.  

There are a number of countries who cannot increase interest rates, because, well, they do not have any demand for good and services. It is why I was wondering yesterday why the Bank of England was raising rates. Britain, doesn't have a Millennial age class. But then, their interest is 3% and the Fed's is closer to 4% looking towards 5%. ( A percentage point in interest is greater than you think in effecting the economy)

The Fed is looking at the rest of the world and sees the US next as not having a 20-40 year old age group for the next recession, and are looking at every tool they can gather for the next time.

For the longest, we have had basically " Free money" and 0% interest rates. And a number of businesses have taken advantages of this. This is especially true of the Tech Industries which have done well.

Interest rates have gone from 3% in Dec. 2021 and probably will be 9% by Jan. 2023. This will increase the monthly payout on mortgages by 50%. 

The interest rates on the US National Debt is going up to $500,000,000,000.

While our interest rates go up, world stock markets stagnate, that means the rest of the world will desire US Currency. ( I told you people in economics class, the American Dollar, don't leave home without it. We went to Israel, the West Bank in May and what currency did they prefer?  The American greenback.) People around the world will be in demand for the dollar. 

Keep an eye on Germany. They are being hit hard right now. Watch and see if they enact some form of " currency control" to keep the German people from investing in US securities, holding greenbacks.

Get ready folks, this is going to get a lot worse before it gets better.