outtafavr

Treasury Yields and the Dollar

Does the fed determine interest rates? Historically, they have. The high interest rates suggested in this article would fly in the face of history. In light of weakness and potential disaster in the U.S. economy, will Uncle Sam's lenders be satisfied with miniscule returns? It may depend on investment alternatives to U.S. bonds at the time. It may also depend on Uncle Sam's appetite for borrowed cash. If there's one thing we know about America and Americans, they love to borrow and spend other people's money. My guess is that America's appetite for borrowed money in the future will exceed foreigner's willingness to lend. That means higher interest rates. The fed will sit and watch. Their "target" rate will be laughable! Higher interest rates would give much needed support to the dollar. Is now the time for this new beginning? Those charts above say it could well be!