Rate cuts are coming because they are inevitable. This will launch a credit boom in the private sector that is loaded to the gills with savings. New financial excesses seem inevitable.
Thank you for this well-argued piece. I think the part of the private sector that will be hurt the most from prolonged high interest rate is the US corporate sector as refinancing will go up from $790bn this year to $1 trillion in 2025, and then 4+ trillion from 2026-2030, according to Goldman. So one way or another as more business closures and commercial real estate loans default, the Fed will have to lower interest rates.
Thank you, Marianne! I agree, there are quite a few essential industries already hurting badly. Should not be forgotten that the Fed's rate do not only work against demand (at least in theory), but also against supply, which makes high rates even more contra productive in the fight against inflation.
What an amazing piece. More people are catching on to this but there’s still very few that understand what is going on. Hopefully this article catches a lot of eyes and that people are open minded enough to comprehend it. Especially the permabears that won’t give it up 18 months in and counting 😁
Thank you for this well-argued piece. I think the part of the private sector that will be hurt the most from prolonged high interest rate is the US corporate sector as refinancing will go up from $790bn this year to $1 trillion in 2025, and then 4+ trillion from 2026-2030, according to Goldman. So one way or another as more business closures and commercial real estate loans default, the Fed will have to lower interest rates.
Thank you, Marianne! I agree, there are quite a few essential industries already hurting badly. Should not be forgotten that the Fed's rate do not only work against demand (at least in theory), but also against supply, which makes high rates even more contra productive in the fight against inflation.
The most basic explanation I have ever seen on how the bubbles are formed through short term debt cycles!
Thank you, Oguz, I am glad you enjoyed reading it!
What an amazing piece that I hope catches a lot of eyes and people are open minded enough to let themselves understand it.
Thank you, Sir, I am glad you enjoyed reading it!
What an amazing piece. More people are catching on to this but there’s still very few that understand what is going on. Hopefully this article catches a lot of eyes and that people are open minded enough to comprehend it. Especially the permabears that won’t give it up 18 months in and counting 😁
Typo in tldr first paragraph.
Walk back rate cuts... Should be rate hikes.
oh thank you, fixed it!