The stock markets continue to rise, protected by very robust and globalized business benefits. Maintaining the stock market boom of the last decade over the next few years means avoiding asset bubbles, that is, raising interest rates to their equilibrium levels. The bad thing is not that the rates are at zero, but that they are at inflation, and therefore that the real interest rates are negative. If this situation persists over time, asset bubbles will be inevitable, and their hypothetical burst will be potentially problematic for exchanges. In other words, for good stock health to persist for many more years, interest rates should be normalized as soon as possible. Not raising interest rates is not an ally for exchanges as someone might think, but quite the opposite, it is their main threat in the medium term.
From that figure they believe that inflation will begin to be dangerous for the stock exchanges if interest rates do not rise.
%% Dont fight the FED; except when they make silly 'irational ex.....'' remarksLOL ''Boom last 10 years ??" Dont forget about the bear of 2018; most of the non trading/investing media does forget that bear of 2018,
Question: with interest rates this low, if the US runs into economic trouble, what weapons does the Fed have to help? In the Great Recession they lowered rates. What would they do now?
Professionals in the markets always ramp up risk in good times. Sure, bad times will return, but that's no reason not to maximise profits beforehand. Amateur private retail traders on the other hand, notoriously ramp up risk when they've lost money. And so they lose more. But if you're living in the US and your job is maybe dependent on the US economy and maybe your pension scheme, this is a good time to get some kind of "insurance".
This economy is quite amazing. This is the longest period in this entire history of the United States that we've gone without a recession. https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States I have this terrible fear though that the next recession will be the worst one in our history when it comes. The socialists will probably take over after that.
Wow, You are right, it will be the longest since the last recessions. I do wonder if US has been preparing for anything that is coming.
Yes, it's been amazing the economy hasn't gone into recession in a long time, but that's the only thing amazing about it...growth has been the opposite. There's been a debate in the past about what caused the depression of the 1930's...many have said the stock market crashing was the cause. I have never agreed with that...it was part of several factors, though. So, could a stock crash cause a similar crisis this time around? I believe yes, but you could also say a lot of debt has to be why a stock crash would be so brutal to people. I think people look at their stock accounts/401k's and notice how their getting richer year after year, so why not go into debt more...especially with such low interest rates. These people believe they'll just pay off the debt in five or ten years when their millionaires.