Why Interest Rates Are Soaring

Discussion in 'Markets & Economies' started by hawkeye1, Mar 1, 2021.

  1. hawkeye1

    hawkeye1 Active Member

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    https://www.abc.net.au/news/2021-03...re-soaring-and-what-it-means-for-you/13201602

    Damn right. Nice to see someone is starting to figure it out

    Not to mention Australian Property Markets. Shush, don't scare the horses....

    pfffft, the only authority they ever really had was in the minds of your average finance article writer.

    I agree. And they are causing the same types of problems.

    Unfucking believable. Who are the looters??? I think it''s the guys who are printing money. Ya know, otherwise known as counterfeiting. Who think they are lord and masters of the economy. Now getting their come-uppance. It's way past time the market retook control.
     
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  2. 66rounds

    66rounds Well-Known Member Silver Stacker

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    Interest rates are just another tool in the bankers kit for wealth transfer. How many loans will become unserviceable at 5%, 10% or 15% interest? How many fully leveraged rental properties will end up on the market?
     
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  3. bubblebobble2

    bubblebobble2 Well-Known Member Silver Stacker

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    ^^^
    Goodriddens to those who keep borrowing more cash to buy properties...banks will finally be knocking on their doors when interest rates in 10%+

    I bet 90% borrowers will default if interest rate is >10%
     
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  4. hawkeye1

    hawkeye1 Active Member

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    We're in January 1979 and Gold is now Bitcoin

    And interest rates will have to go up eventually, just like then. The Central Banks will fight, but ultimately lose.

    [​IMG]
     
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  5. bubblebobble2

    bubblebobble2 Well-Known Member Silver Stacker

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    CB fight with who?! Banks?! This is just ‘smokes and mirrors’
     
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  6. 66rounds

    66rounds Well-Known Member Silver Stacker

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    Bitcoin is a distraction from gold and metals. What are the globalists and their cronies buying? Metals. What are they culturing people to buy? Cryptos. What will they dump? Their own assets or everyone else's?

    Diversify or drown, but don't forget the millennium safe harbour of gold
     
  7. mmm....shiney!

    mmm....shiney! Moderator Silver Stacker

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    Then concentrate harder.
     
  8. adze67

    adze67 Well-Known Member Silver Stacker

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    A Galaxy far, far away...
    Around $850 for Gold, Silver $39.50 in early 1980...wonder which metal they are really scared of losing control of ;)
    That's around 21.25:1 ratio o_O
    Silver Chart.PNG
     
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  9. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

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    They will pin the yield curve and print as much money to buy those bonds so as they need to. They've basically said as much if you've been listening and yesterday it was the RBAs turn to make a move.

    This bond yield spike is a little market tantrum and the central bankers will come in and whack-a-mole just like they always do. In a week or twos time it'll once again be RISK ON and reflation trade all the way Jose :)

    I can't see them letting the market tank because of a little tantrum like this. Especially after the massive intervention to save asset prices as we saw in 2020.
     
  10. Silverling

    Silverling Well-Known Member Silver Stacker

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    Buy the tantrums and sell the risk on.

    (My opinion only, this is not financial advice)
     
    Last edited: Mar 2, 2021
  11. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

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    DISCLAIMER - This is not financial advice :)
     
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  12. hawkeye1

    hawkeye1 Active Member

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    The market.

    Market participants, I think, are starting to realise, en masse, that the central banks took things too far.
     
    Last edited: Mar 2, 2021
  13. hawkeye1

    hawkeye1 Active Member

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    Many make the mistake, I think, of thinking that Central Banks are all powerful. That, if they say they are going to hold down interest rates for years, then it will be so.

    Reality, is that they are just the wizard in the Wizard of Oz, pulling levers. Read the article in the above link. The writer pretty much makes this clear without directly saying it.
     
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  14. hawkeye1

    hawkeye1 Active Member

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    It's possible. We'll see. But like I've said elsewhere, I think people put too much stock in Central Bank power. If you think about it, it's been a crazy year so far, and we are only 2 months in.

    Edit To Add: The central Banks had a lot of firepower at the start of the last decade. By 2020 they had almost used all of it up. That burst last year, was them using pretty much the last vestiges of what they had left. There is a reason why they are screaming for fiscal help.

    You say tantrum, I say first skirmish.
     
    Last edited: Mar 2, 2021
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  15. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

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    [​IMG]

    They will keep printing until we get runaway inflation because only then will they get political pressure from the masses to stop. At the moment, the average Joe doesn't even realise he's getting fleeced. Only when the price of bread and milk starts going up will he start agitating the pollies to rein it in.

    By that time it is too late, of course, but for now the central bankers are far from done yet.
     
  16. mmm....shiney!

    mmm....shiney! Moderator Silver Stacker

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    Probably not staple commodities, especially factory food types. Modern nations like Australia have more than enough capacity to meet demand for that sort of thing. There won't be queues of starving people with wheelbarrows lining the streets.

    It'll be things like medical care, infrastructure, services, insurance etc etc, the higher level things that are most likely to get hit by inflationary pressures. And of course assets.

    Screen Shot 2021-03-02 at 12.38.26 pm.png
     
  17. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

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    I was talking more globally than just Australia. I tend to agree that we have enough here for our own needs in Australia, but if our currency drops and producers can make more by exporting the food rather than selling into the local economy....that can produce the same effect of price increases despite the abundant local production. In that scenario I'd see average Joe agitating more toward protectionist policies and price fixing. Or maybe gov will go the food stamps route and stave it off for a while. It all ends badly....but not for a while ;)
     
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  18. mmm....shiney!

    mmm....shiney! Moderator Silver Stacker

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    For sure. But if our goods are in demand from overseas, then our currency will be in demand as well. I think we can take a depreciating AUD out of the equation as a main driver into decline.
     
  19. jultorsk

    jultorsk Well-Known Member Silver Stacker

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    ... "lower for longer" continues to 2024, or how do you interpret this @mmm....shiney! ?

    DJ RBA Says QE Program Can Be Extended if Needed
    02 Mar 2021 14:53:09

    By James Glynn
    SYDNEY--The Reserve Bank of Australia launched a strident defense of its quantitative easing program on Tuesday, telling financial markets it remains committed to keeping government bond yields low to support the economy, and will use the extensive firepower at its command to achieve its goals if required.

    "The Bank is prepared to make further adjustments to its purchases in response to market conditions... the Bank is prepared to do more (QE) if that is necessary," RBA Governor Philip Lowe said in a statement after the central bank's March policy meeting.

    "The Board remains committed to maintaining highly supportive monetary conditions until its goals are achieved... The Board does not expect these conditions to be met until 2024 at the earliest," he added.

    The comments come as improving economic fundamentals and the rollout of Covid-19 vaccines put upward pressure on government bond yields globally, testing the QE programs of major central banks.

    The RBA significantly ramped up its government bond purchases earlier this week, signaling its determination to keep bond yields low.

    The RBA announced a $100 billion Australian dollar (US$77.72 billion) government bond-buying program in November, and rolled out an extension of equal size in February that will run until September.

    As expected, the RBA's board left its official cash rate unchanged at 0.10% at the policy meeting, and also kept its target for three-year government bonds at the same level.

    The RBA has its policy challenges on the domestic front, as house prices are surging thanks to record low interest rates and a glut of household savings.

    Economic growth data due for release on Wednesday are expected to show the economy was hit hard in 2020 by the Covid-19 pandemic, but staged a remarkable recovery in the second half of the year.
     
  20. GOLD1

    GOLD1 Member

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    Somehow governments and central banks want to restore confidence. Inflation is certainly on the cards, the artificial hope raising, playing down on gold price and it is deceptive that life is back to normal once again. We are fortunate that we can still afford to buy more gold.
     

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