The Reason The US Federal Reserve has raised interest rates again – September 27, 2018,
The U.S Federal Reserve Officials increased the target for the bank’s benchmark rate by 0.25%, to a range of 2%-2.25%. A majority of members also said they expect another rise before the end of the year. the reason this has happened is primarily what Donald Trump did with cutting regulations on the U.S economy. It’s kind of hard for a lot of people to grasp how much U.S dollars are circulating around the world, I’m not talking about debt either I’m talking about the receivers of those debt payments. Remember that when you make a purchase for something, even if the person makes the purchase using a credit card, the receiver of the cash you sent has the money in their possession free and clear. In that instance, it’s up to the credit card company to collect the money from you.
This is why credit card companies charge fees on every angle, with that said credit cards and other lenders of financial instruments have actually allowed a lot of people to become very, very rich and despite what many conspiracy theorists believe about a coming economic collapse, they’re only partially right, with how it will actually unfold. The only way this economy will collapse is if this type of economy is rejected.
The U.S debt is future debt, not present debt, if the debt becomes present debt it’s an indication that the U.S economic policy has gone too socialist. The U.S economy is not necessarily the most capitalistic nation on the planet, but it is the most entrepreneurial on the planet. The truth is regulations in the United States actually tame their entrepreneurial beast if you travel around the world which is something Trump has done a lot in the private sector what you’ll realize is how many nations are in fact ripping off the United States.
Sure, those countries will never admit to doing it, but most countries don’t have a consumer or a consumption-based culture. China as an example is not known as consumption nation, despite China having a communist dictator the people in China are rather conservative with how they spend their money. As an example most Chinese people don’t buy Cars using Auto loans, most Chinese don’t spend money using a credit card, most Chinese people save money, they save so much money in fact that when they come to countries like Canada they’re often stopped and searched because there have been many instances when Chinese people came into Canada with over $100,000 in undeclared Canadian currency.
One might ask how are Chinese people able to save or accumulate so much money in such a short amount of time? The answer is simple the Chinese economy isn’t regulated as the countries like Canada or America. Plus most of the consumption in China comes from products that are grown or manufactured in China. If your country manufactures a lot of things and there’s no unions, no lobbyist groups, no special interest groups and no media or commercialism bombarding your mind with the useless information you won’t waste your time or energy on things that don’t equate to accumulating wealth. Remember readers that China is a communist dictatorship, The Chinese communist party decides how the Chinese people think.
That’s not the case in America, in America, the culture revolves around the concept of freedom, now there are pros and cons to the American culture. The Pros are people are allowed to think they way they want to think, the cons are people are allowed to think how they want to think. This is why when a good salesman like Donald Trump comes along who’s done business internationally and can see the world for what it is as opposed to what the politicians or the media are selling you on what they think it should be, he’s going to be able to sell a large segment of the American population on the importance of economic growth of social justice.
Hard money types, Gold bugs, Libertarians, conservatives they’d rather a free market be the answer, but they often forget that in a capitalistic society you have to have the balls to sell people on your vision in a way even the common man can understand. This is not a skill most right-leaning political people have the ability to do. The Left-leaning politicians typically have the ability to sell masses of people on easy answers, but the Right side politically has a hard time doing this because let’s be honest economics is boring.
That said, Trump as a salesperson is smart enough to know that in order to sell people on a vision you have to create an enemy, an evil and villain and because big government people are all corrupted his done a good job exposing Leftists in a way the common man or woman can see for themselves.
All this aside, I say this because their America economy isn’t going to die anytime soon unless it goes too far left. If the U.S Dollar crashes, the truth is they’ll create another one. A lot of people forget that the most of the rich people don’t actually keep their money in currency, the rich typically keep their money in assets. There are assets that can’t be taxed, don’t cash flow and allow you to borrow against them. This has always been the central banker’s dream, this has been one of the dreams of the rich from the beginning of money creation. How can make my abundant wealth appear invisible, or appear and disappear when I want it too.
This is the world we live in this is the economic system created by the United States, and the truth is the only people that will be affected by higher interest rates are the people who are overleveraged or the people who are invested in entities which are over-leveraged. When Obama bailed out the banks it was one of the biggest con jobs in human history, in the future people will look back at Obama as the Puppet Master, because the truth is if Barack Obama was white, even if he were a White woman he would have never gotten away with what he got away with.
No bailout was necessary, Obama actually bailed out the rich, try and remember that the poor usually can’t get loans, so what a few people bought homes they couldn’t afford under bush, Ummm…. those people lost their homes anyway and Obama still bailed out the banks and the federal reserve still lowered interest rates and implemented quantitative easing. Now, how could that problem have been solved more easily? The answer is lifting regulations! which is exactly what Donald Trump is doing. Now, is there a downside to lifting regulations? of course, there is, there’s a downside to the free market too, this world isn’t perfect, the real question to ask is, what do government enforced regulations do?
The government enforced regulations raise the cost of doing business, which equates to fewer players in the game, which equates to more poverty, which equates to a lowering of the economic IQ of the population which results to more people and entities opting for welfare and government help which in time ends up in an economic crash. That said, why then is China in economic trouble? The reason China is in economic trouble is that China has been loaning out money to countries that are overly regulated. So these countries will eventually default on these loans, now China can take resources from those countries to cover loan payments, but that resembles colonialism and as the British Empire will tell you, Colonialism is rather expensive and inefficient.
Loaning money to people who don’t know how to multiply the money is similar to a giving a person with bad credit history a high-interest credit card. Now, in theory, the idea makes sense because you as the Chinese communist party will collect as much interest as you can and when the country declares bankruptcy you’ll grab what you can, but in practice if you know anything about people who are in debt they tend to react in ways that you wouldn’t expect, maybe the money you loaned them will be used to fund terror groups that will try to undermine you in every way possible, maybe they might smear you or do things that you’d never think possible. People are complicated and people in bad debt can be even more complicated. So this ofcourse is why central planning has it’s flaws and why China may have some interesting challenges ahead.
On the Canadian front, I’m not sure what planet Canadians are on, but higher interest rates is the last thing Canada needs right now. People forget Justin Trudeau’s booming economy has comed from Justin Trudeau borring a lot of money from the bank of Canada, not only did Justin Trudeau borrow money, he also create a lot more government jobs, a lot of public sector jobs were created under ustin Trudeau, while the private sector in Canada is shrinking. Adding to this disater is the Trump and Trudeau fued, who cares about the details, the bottom line is Canada is very reliant on the auto sector and Trump recently signed a free trade deal with South Korea. South Korea is a direct competitor of Canada’s auto sector and now they have a free trade arrangement with the United States.
I’m not going to write anymore about this because in a few years the results will speak for themselves. If Canada doesn’t make some serious structural changes soon our economy is heading for Argentina territory.
Intersting times ahead.
