Debt And Why The Fed Is Trapped

Summary

  • There are some important financial implications to below-trend economic growth.
  • If inflation remains high, interest rates will adjust, triggering a debt crisis as servicing requirements increase and defaults rise.
  • Most of the aggregate growth in the economy was financed by deficit spending, credit creation, and a reduction in savings.
  • While increasing interest rates may not “initially” impact asset prices or the economy, it is a far different story to suggest that they won’t.

FED The Federal Reserve System the central banking system of the United States of America.

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The massive debt levels provide the single most significant risk and challenge to the Federal Reserve. It is also why the Fed is desperate to return inflation to low levels, even if it means weaker economic

Debt, Debt & Why The Fed Is Trapped

Debt, Debt & Why The Fed Is Trapped

Debt, Debt & Why The Fed Is Trapped

Debt, Debt & Why The Fed Is Trapped

Debt, Debt & Why The Fed Is Trapped

Debt, Debt & Why The Fed Is Trapped

Debt, Debt & Why The Fed Is Trapped

Debt, Debt & Why The Fed Is Trapped

Debt, Debt & Why The Fed Is Trapped

This article was written by

Lance Roberts profile picture
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Unique, unbiased and contrarian real investment advice

After having been in the investing world for more than 25 years from private banking and investment management to private and venture capital; I have pretty much "been there and done that" at one point or another. I am currently a partner at RIA Advisors in Houston, Texas.

The majority of my time is spent analyzing, researching and writing commentary about investing, investor psychology and macro-views of the markets and the economy. My thoughts are not generally mainstream and are often contrarian in nature but I try an use a common sense approach, clear explanations and my “real world” experience in the process.

I am a managing partner of RIA Pro, a weekly subscriber based-newsletter that is distributed to individual and professional investors nationwide. The newsletter covers economic, political and market topics as they relate to your money and life.

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