Is Everything About To Go To Shi*

The fed once again just raised interest rates. After a very short pause the fed increased the rate by 25 points or 0.25% brining us to nearly an all time high we saw back in 2008/2009 just before we hit what honestly should have been considered a depression and not a recession. It looks like in my lifetime I'm going to see at least two of these big blows all while trying to build funds to retire on. No easy task for anyone and then no wonder we are all in a world of hurt at the moment the system is legit breaking.

Inflation

Inflation is a topic hot on the mind of many this year. What peaked at a little over 9% is now showing 3% which is far closer to the targeted 2% or less. While many speculate that would have been a reason for the fed not to increase rates the opposite is actully true. That's because that 3% you're seeing today was because of actions the fed took 12-18 months ago and would you have it that's exactly the point at which the fed started to crack on the rate hikes. In fact we are most likely around half to 3/4 of the way into the fed rate hikes from last year which is showing a down trend in inflation.

However the FED might have actully learned a lesson this time and a rate hike now makes sense. That's because as history has shown us in the past the fed would normally back off and maybe even lower the rate by a bit only to cause inflation to skyrocket 6 months from now and dip the economy into a recession like we have seen happen time and time again.

By increasing the rate hikes now this should offset and make for a smoother transition as we are most likely still in for another 2-5 years of hard times of which the hardest are only just about to start.

In another point this is when you start seeing people pull sharply out of the stock market and instead dump money into savings. That's because many banks will be paying 5%+ interest rates on money for the next few years while the stock market struggles and most dividend paying stocks don't come close to those rates.

But What About CORE CPI

The numbers you often see posted is the general inflation number that excludes things like food and energy such as gas and housing. This number comes in at a 4.8% which isn't a number that's shown to you often in the news as these so called items are things you HAVE to have so they shouldn't be included in the governments crazy mindset.

More Rate Hikes?

As you saw today with the stock market any time there is a rate hike even if it's a small one the stock market seems to suffer from it. When you look things over there is extreme greed happening right now in the stock market. But there's also other factors at play here.

The war a global war is actully propping up the USA economy by providing shells and other equipment for war to not only Ukraine but also other countries who are looking to dump money into their military. This is actully a great thing for the USA as many of the M1A1 and Bradly armored fighting vehicles are being phased out for a new version which means countries are buying up the old supplies that would have otherwise just gone into backup storage.

We know at least one more rate hike is planned for this year but its also speculated at until that core CPI number comes down from 4.8 to that 2% mark we most likely will continue to see constant rate hikes that may take us up to 6%-7% by the time they stop putting us back in a time of the 90's.

The Stock Market

In cases like we are seeing now the normal assumption is stocks will sell off as less riskier investments become more profitable. While this might be the case in history it's because few people managed that money. In todays landscape every person pretty much takes care of their own finances and invests in whatever they want.

It's why we seen the stock market in general up nearly 20% this year in a time when inflation has been around 9% and the fed increasing rates would have normally triggered a sell off. Again the markets are being propped up on many different factors at the moment such as world war, every tom, dick and harry being able to invest however they wish and a general feeling that most younger people and mid age are very investor happy compared to older generations.

Housing Sector

The housing sector however looks like a big win at the moment. With inventory crazy low from people locked in at record low mortgage interest rates they simply aren't moving and I don't blame them!

This means new home builds are also going for a premium at the moment. Making it that builders are very optimistic in new home builds and making a fortune off of it. This most likely will continue for the next 5 years or whenever the fed starts to really back off the rate hikes to more around the 1%-2% levels before people will be willing to give up their low interest rate mortgages.

Like with anything if you know and understand why things are flowing the way they are you can stand to make a lot of money or at least protect the money you have. This information is more readily available to people compared to how it was 20 years ago mainly because of the internet and people who share this information with others.
*This article is not investment advice and is for entertainment only. Do your own research before investing.

Posted Using LeoFinance Alpha