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What factors force FRS to raise rates?

The adverse effects of the FRS growth of the rate for the "debt pyramids" were discussed repeatedly. In short – the growth of value of the loan for the end debtors began even without it, and, boosting the process, the Fed will accelerate a new debt crisis.

So why did they do it?

Maybe that's why? According to today's report, BLS US inflation (core CPI) is already more than a year (13 months) is above the target level indicated by the Fed, and in some categories – rent and cost of ownership of housing, for example, inflation reached the level of 3.6% - the highest level since 2007, which reflects the flow of speculative capital of re-inflated bubble in real estate.

And if oil prices resume growth, it will be another powerful inflationary factor.

In general, the Fed's antics in previous years had driven them into a corner. One way you go – promotion of inflation, accelerating compromising of US T-bills by foreigners and reducing the use of the dollar in foreign trade. The other side you go – the growth rates for debtors, the collapse of the mortgage and a new round of debt crisis.

But you can make and a knight's move - to raise rates, and then to open for ‘friends’ preferential credit line by the printing press (mega-QE). This will prevent the collapse of the debt of the friends, and at the same time allow ‘friends’ to take away property from the congested debts of ‘strangers’ who will no longer have such preferential lending channel and will have to be credited to the harsh conditions.

A separate issue is the future of the pension and social system of the USA, but in any of the options for development, its future is unenviable - no one has money to close the accumulated imbalances.

Source: aftershock

  • December 16, 2016 4:25 PM MSK