Loading ...Interest rates have been gradually falling since 1982, 40 years. If rates keep rising now for 10 years this could be 1970 all over again. The last chance to sell stocks houses and expensive collectible cars, things that people invested money in because rates were so low.
When interest rates started going up in 1970 5% to 1980 18% on a bank CD? Over the 10 years actually 14 years ‘68-‘82, Gold and silver also went up that’s why they raised the rates to kill gold and protect the dollar. Gold $140 in 1975 to $800 in 1980 finally gave up.
In 1980 silver was so high and houses so low that a $1000 bag of junk silver could be sold to buy a house. Gradually higher rates ‘70-‘80 gradually killed antiques and collectibles including exotic and very expensive European sports cars that rich people invested in as inflation hedges.
People sold everything they could to collect high bank interest. Or buy 30 year government bonds paying 16% with no call back provision. Bond prices climbed after 1980 for 40 years and peaked recently when rates started back up.
Some people were buying gold and silver instead ‘70-‘80 and that made the dollar look bad but the high rates made dollars and US bonds look good too by 1980. They also sold off stocks and real estate 1968 to1982. That’s why houses and stocks stayed flat for 14 years.
Staying flat is losing as we know with money in the bank at 1%. Bottom line, will they keep raising rates for ten years? Or the economy tanks soon and the Fed chickens out and start dropping them to inflate again.
Unfortunately everything is different these days. The USA was booming by 1970. Booming means high school graduates can get married and have kids with wife at home. The USA today has been in a decline since 1970. Decline means high school graduates commit suicide and do mass shootings. Unless they have wealthy parents that own a business, or send the kids to Harvard to make a livable salary. If lucky they get a cops job in my town and make $200k a livable salary.
Too many wild cards during this transition after 2008, from an old played out system to a new one.